Prison Inmate Scams IRS by Preparing False Tax Returns for Other Prisoners

An inmate held at Riverfront State Prison in Camden, New Jersey pleaded guilty to aiding and assisting in the preparation of false and fraudulent tax returns on June 27. The inmate faces three additional years in prison and a $250,000 fine at sentencing, which is scheduled for October. He admitted that he helped other inmates prepare and file false tax returns designed to trigger tax refunds for several tax years, to which they were not entitled.

The prisoner told inmates that employment taxes were held from the wages they earned while working in the prison, and they were entitled to claim refunds. However, the prisoners were paid no more than $5 per day, from which no taxes were withheld.

The fraud scheme resulted in a $215,000 loss for the IRS. The inmate admitted to preparing and filing approximately 110 tax returns for more than 60 inmates.