By Rob Stallworth
Several years ago I noticed more and more commercials on TV and radio promising to “get the maximum refund possible” from your tax returns. Apparently a number of offenders in prison heard the same commercials because in recent years inmate tax refund fraud has skyrocketed!
Last year alone, the IRS caught and stopped more than $1.7 billion in fraudulent tax returns by prisoners, according to the Treasury Inspector General for Tax Administration, J. Russell George.
“It’s a serious problem…the fact that prisoners, people who have been convicted of crimes, are able to manipulate the tax system to their advantage and for many years undetected and at a growing rate is something that must be taken seriously and is of great concern,” he said in this news article.
Federal law is now in place to combat inmate tax fraud under the United States-Korea Free Trade Agreement, which mandates the Federal Bureau of Prisons and all state prisons provide a list of inmates so they can be cross-referenced with names and social security numbers on tax returns. Before the law was enacted, this information was sent by prisons to the IRS voluntarily, which meant a number of people slipped through the cracks because of missing or inaccurate information.
Inmate Earns $300k in Tax Scam
Dwayne Selvey is a former inmate who is better known as the “tax man.” In an interview with NBC Bay Area, Selvey says “it was free money.” Selvey scammed the system by filing tax returns for himself, other prisoners, friends, and family by using their real names and social security numbers. In the filings he would put in fake income information and ask for between $3,000 and $6,000 in refunds for each return.
Selvey admits he had been filing fake returns for years—sometimes hundreds at a time—and received $300,000 or more each year. The Inspector General acknowledged that this kind of fraud is unacceptable. He said the IRS should be doing a better job of stopping such schemes by using its resources and its technology to arrest and prosecute such cases. That’s a good idea, however, it’s well known that in the past couple of years the IRS has had its fair share of budget problems, a dwindling workforce, and an increasing workload. All of these factors contribute to IRS resources being spread thin during tax time, which is exactly what inmates are banking on.
About the Author: Rob Stallworth is a former Deputy Chief Probation and Parole Officer for the Virginia Department of Corrections. His career spans more than 15 years with the department where he has served in various positions such as Gang Specialist and Academy Adjunct Instructor. Rob is currently a member of American Military University’s Public Safety Outreach Team.
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