The American Taxpayer Relief Act of 2012 (ATRA) is not all about tax rates and extenders. I covered the highlights yesterday. But as I read the bill one section popped out at me; Section 209 – Improve and Make Permanent the Provision Authorizing the Internal Revenue Service to Disclose Certain Return and Return Information to Certain Prison Officials.
I’ll admit I missed the Temporary authorization but I’m glad to see Congress including this provision with the fiscal cliff bill.
Tax return fraud has become a big business in prison. It’s not surprising considering the number of tax credits which can be refunded to taxpayers. By the end of June 2010, 1295 prisoners had filed for the First Time Homebuyer’s Credit receiving refunds totaling over $9 million. This included over 240 inmates on death row.
Part of the problem in combating these fraudulent returns is the IRS confidentiality rules. This section of ATRA will allow the IRS to release prisoner returns to state and federal prison officials when tax fraud is suspected. This will allow the prison to investigate and take administrative action. This act applies to government run prisons and contractor run prisons.
Hopefully, this will help the IRS and prison officials reduce the number of fraudulent returns coming from the prison system.