States quiz taxpayers, hire outside help to combat fraud

Staff Writer
Columbus CEO

State tax officials across the U.S. are taking new steps to fight an upsurge in fraud — specifically, identity thieves filing false returns and directing the refunds to their own bank accounts. Here's a look at some of their efforts:


The number of fraudulent tax returns detected in Arizona increased almost tenfold — to more than 73,000 — between 2011 and 2015. So the state did something new: It bought "fraud mitigation and prevention solution" services from a private Maryland company. Lawmakers approved more than $3 million for the move.

Arizona Department of Revenue spokesman Sean Laux noted more than $70 million in fraudulent refund claims were detected in each of the past several fiscal years.



For the first time, Idaho's tax authority this year is sending letters asking taxpayers linked to suspicious returns to go online to confirm their identities or the fact that they did, indeed, file.

Some 9,000 letters were sent in the first few months of this year, said Renee Eymann, spokesman for the Idaho State Tax Commission. She added that last year, Idaho stopped more than $1 million worth of fraudulent refund claims, more than double the amount caught the previous year.



Kentucky asked state taxpayers to be patient this year, saying refunds could take longer than usual because revenue officials needed to take more time to check for fraud. This came after the Kentucky Department of Revenue found more than $16.5 million in fraudulent refund claims last year, double what it detected the previous year.

Dan Bork, commissioner of the state tax agency, said he understands taxpayers might find the wait frustrating. But "we would rather protect their refund than have it end up in the hands of criminals," he said in a statement.



Montana began sending verification letters similar to Idaho's last year. This year, it added a new web page to help impatient taxpayers track the status of returns.



South Carolina requires businesses to send W-2 statements to employees by Jan. 31. But businesses can take another month to get in the documents state tax collectors need to compare to individual tax returns to ensure filings are genuine.

Last month, the state House unanimously approved a bill requiring businesses to turn in statements by Jan. 31. The bill is now up for debate on the Senate floor.



Ohio says it has blocked more than 297,000 phony returns that claimed a total of nearly $534 million in refunds since a flood of such fraud started in 2014.

As part of that effort, the state sends letters to some tax payers asking them to go online and take a quiz to ensure returns submitted in their name are genuine. Indiana, Alabama and Wisconsin have similar quizzes in which taxpayers are asked to confirm personal information.