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N.J. prison inmate swindles IRS by filing bogus tax returns

barbedwire030411_optBY ALICIA CRUZ
NEWJERSEYNEWSROOM.COM

A prison inmate swindled the Internal Revenue Service out of more than $200,000 while serving a 10-year sentence on robbery charges at the Riverfront State Prison in Camden.

Jerry Julian's pseudo tax return scheme began in September 2006 through early 2007, and netted more than 60 inmates returns from the IRS. Julian charged the inmates a fee for preparing the returns for tax years 2003 through 2005.

The former Seaside Heights kitchen worker told the men that the federal government paid minimum wage for their labor, which entitled them to refunds for the employment taxes withheld from their meager earnings, the Courier Post reported. Inmates are paid $5 per day and no taxes are withheld from their pay.

Julian admitted to helping file more than 110 refunds, with bogus earnings and tax withholdings that generated approximately $215,000 in returns, said U.S. Attorney Paul Fishman. The 47-year-old pleaded guilty Monday in Camden federal court to one count of aiding and assisting in the preparation of fraudulent returns. Prison officials have transferred him to Northern State Prison in Newark while he awaits sentencing. Julian faces three years in prison and a $250,000 fine when U.S. District Judge Noel L. Hillman hands down sentencing in October.

According to an Internal Revenue Service report to Congress, the agency forked over $903,695 in fraudulent federal tax refunds to New Jersey state prisoners in 2009. Florida inmates led the pack having received a whopping $12,576,944 in phony refunds. The report came on the heels of a federal audit released in January 2011, USA Today reported.

The audit concluded a return from an inmate does not automatically trigger a red flag at the IRS and agent do not routinely conduct fraud screening on tax returns filed by inmates. Although prison wages are not taxable, some inmates and their family members are legally entitled to refunds due to income received from investments, inheritances or other sources. Washington enacted legislation in 2008 intended to crack down on fraudulent tax refunds claimed by inmates, but the intended enforcement has been bogged down by legal questions.

 

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