More than 1,200 prison inmates, including 241 serving life sentences, applied for and received first-time hom ebuyer tax credits, according to a Treasury Department report released Wednesday.

Treasury said many filed multiple claims, even some outside the alloted time persiod, and received help from paid preparers. Altogether they fraudulently received $9.1 million in tax credits with $1.7 million going to prison lifers.

The report also identified 2,555 filers who received $17.6 million for homes that they purchased before the tax credit program began. It flagged 206 filers who sought credits on multiple properties and were awarded $1.4 million.

In addition, 34 employees of the IRS were nabbed for filing illegally for the credit.

Source: CNNMoney, Aaron Smith (05/23/2010)