Prisoners May Be Preparing Your Tax Return

A story in USA Today reports that inmates, some of them serving life sentences, have applied to the IRS to be tax preparers. Most of them did not reveal that they were incarcerated. It’s good to know that prisoners are trying to be productive members of society. It’s kind of like Andy Dufresne in Shawshank Redemption (1994) who does the books for the warden and the prison guards.

While Andy was innocent of the crime of murder that got him into prison, he used his considerable financial skills to turn the tables on the corrupt warden. He learned how to be a criminal while in prison. It’s quite a story worth watching. I suggest that you watch an edited version since the language and some of the scenes are kind of rough.

Maybe these incarcerated prisoners got their inspiration from watching Shawshank.

The inmates and ex-cons were among thousands of applicants who got the identification numbers from the IRS from September 2010 through July 2011 as the agency began phasing in a 2009 congressional mandate that requires many preparers to file tax returns electronically.

There is just one problem. The prisoners will have access to the social security numbers of the tax returns they’re working on.

If the prisoners have access to the internet, and they have Social Security numbers at their disposal, who knows what kind of mischief they will be able to get into, especially if they have someone on the outside to help them.

It’s kind of appropriate that criminals want to work for the IRS. They’ll fit right in.

The IRS is trying to fix the problem:

“Our report shows that the problem of misuse of the tax system by prison inmates continues,” said J. Russell George, who heads the inspector general’s office. “Based on our report, the IRS is working on solutions for suspending preparer identification numbers obtained by prisoners and preventing future applicants who are prisoners from receiving a preparer ID number. They must persevere in these efforts … especially given the prison inmate population’s determination to misuse the system.”

“[E]specially given the prison inmate population’s determination to misuse the system.” What an understatement.

So if you are using an outside organization for this year’s tax return, you might want to ask if the preparer is in a jail somewhere.