Tax fraud by inmates costs the US millions every year.

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GREENSBORO, N.C. -- You're probably about to file your taxes. A lot of criminals are filing returns too! They're filing fake returns that are ripping you off. And get this: they're doing it from behind bars.

"You got all these people out here in society that's working and paying taxes legit, and then you got criminals coming along and taking these people's money," former inmate Dwayne Selvey said.

Selvey's a former South Carolina inmate who claims to have stolen three and a half million dollars for himself and other inmates through tax fraud. The IRS confirms at least 276,000 fake inmate returns were filed in 2012. That adds up to $1.7 billion in returns.

The IRS says they catch 94 percent of the fraud. Still that's millions of bad refunds being paid out. The IRS found almost 40,000 North Carolina inmates filed fraudulent returns in 2009 - leading to $372,000 in bad refunds.

State prisons screen every piece of mail for IRS documents and forward them to the feds. Federal authorities check the mail with a database of inmates supplied by each state.

North Carolina prison leaders say the information was accurate when they sent it to the IRS. But the IRS only requests the information once a year.