IRS was not defrauded ~ more like IRS was stupid. Remember, the prisoners are at fixed addresses for extended periods of time. The cops are in charge of their mail. IRS computers can be programmed to pull this stuff aside until the legitimacy of the claims is determined.
And we the taxpayers will never see a cent of the money returned.
Some of these prisoners are pretty enterprising guys.
I wonder if any of them did actually manage to buy a house while in the hoosegow?