If prisoners can operate street gangs while in prison, it should be no surprise to learn that they can commit tax fraud while behind bars. At the Apalachee Correctional facility in Florida, inmate Michael Joseph did just that. Dubbed “H & R Block” by fellow inmates, Joseph filed false tax returns that netting him over $100,000. Apparently he filed forms 1040/1040EZ with a form that substitutes for W2’s. The forms slipped by prison officials and were routinely processed by the IRS.
The Florida Department of Corrections said it is difficult to stop this type of scam because inmates are allowed to file tax returns, and some inmates legally receive refunds. (It wouldn’t be difficult to stop if the Department noted dozens of tax returns being sent out by one inmate—or noted dozens of tax refund checks being received by an inmate.)
Joseph, who has a history of crimes including sexual battery, kidnapping, grand theft and drug possession, was charged with the scam after he was released from prison in 2010. He was set to go to trial in November but the trial was rescheduled after he failed to appear. His crime highlights a widespread problem that was recently publicized by CBS news. It reported that in 2009 prisoners fraudulently collected more than $130 million in refunds. According to CBS, nearly 30% of inmates in one Ohio prison filed false returns in 2009.