Identity Theft and Your Tax Return

We hear a lot about identity theft in the news. Part of the identity theft crisis can even involve your income tax return. Thieves will file fraudulent tax returns using other taxpayers’ social security numbers in order to claim refunds. Then when that taxpayer goes to actually file his/her tax return, the Internal Revenue Service (IRS) or Indiana Department of Revenue (IDR) shows that a tax return has already been filed. Once that happens, the steps the taxpayer must take with the IRS and IDR to clear up the situation are time consuming and tedious. So what can/is being done to prevent this? This article addresses the steps the IDR is taking to help prevent tax filing fraud.

In the 2014 tax filing season, IDR implemented a couple of different identity protection programs – one you might see and one you will not. The program you will not see involves the IDR verifying the identity of the taxpayer with LexisNexis, a verification database program. The program helps confirm the taxpayer’s identity before the IDR will finish processing the tax return and issuing the refund.

The second identity protection program the IDR is once again implementing during the 2015 filing season is the Identity Confirmation Quiz. The quiz is randomly assigned to taxpayers and is a set of four questions that asks taxpayers to verify their identities – like a family member’s birth month or a prior address. During 2014, only 5% of taxpayers were asked to complete the quiz and IDR expects that roughly 5% of taxpayers will be asked to participate in the quiz in 2015. During this tax filing season if you electronically file your return and it takes more than 5 weeks to receive your refund, it’s possible you may have been selected to participate in the quiz. You should receive a letter from the IDR indicating where to go online to take the quiz or a phone number to call to answer the questions.

Watch for upcoming e-newsletter which will discuss tax filing fraud and the IRS’ preventative measures.