Indiana Department of Revenue Fights Fraud

Doug Johnson

January 16, 2015

The Indiana Department of Revenue will again implement identity verification for the 2015 tax season. If a taxpayer receives a letter from the department asking them to take an Identity Confirmation Quiz, don’t be alarmed. It does not mean that your identity has been stolen. The State is trying to get a handle on the proliferation of fraudulent state tax returns being filed.

As was the case last year, the quiz consist of 4 questions that the taxpayer should only know the answer. Three of the four questions must be answered correctly to pass the quiz and two attempts are given to pass the quiz. The quiz can be taken on-line or over the phone. The questions are derived from the LexisNexis identity verification database.

The letter gives instructions on how the quiz is handled. Please see the e-m message sent to professional preparer below.

The Indiana Department of Revenue again will implement a new identity protection program for the 2015 tax season. This program is designed to combat the growing epidemic of identity theft across the nation.

In 2014, the department’s identity protection program stopped $88 million in attempted identity theft through 74,000 fraudulent refunds. 11 percent of all 2014 requested Indiana tax refund dollars were attempted identity theft.

Security Features

To prevent taxpayers’ refunds from being stolen, the department will use the automated identity verification services of LexisNexis to help confirm the identities of all Hoosier taxpayers due a refund in 2015.

Identity information from individual income tax returns is checked against the LexisNexis identity verification database. This database verifies that the person submitting the return is who they say they are. In 2014, 95 percent of all taxpayer returns were confirmed and moved into processing. The department expects 95 percent of taxpayer 2015 returns again will be confirmed at this step.

Identity Confirmation Quiz

Some taxpayers will receive a letter from the department asking them to take the Identity Confirmation Quiz. It is important that taxpayers who receive this letter confirm that the names(s) and address information at the top of this letter matches an Indiana income tax return they recently submitted. If the information is not correct or the taxpayer did not file a tax return for the indicated year, he or she should NOT complete the Identity Confirmation Quiz, but rather call the Indiana Department of Revenue at the number indicated on the letter.

Taxpayers whose information is correct must complete the Identity Confirmation Quiz. Tax preparers are not notified that clients are selected to take the quiz because each taxpayer is responsible for taking the quiz. The details of the quiz are the same as in 2014. It contains four questions for which only the taxpayer would know the answer. Each taxpayer selected has two attempts to take the quiz via our secure website. After successful completion of the quiz, the taxpayer should receive his or her refund on time—within 14 days if electronically filed and within 12 weeks if filed by paper.

Those who do not pass within two attempts will be asked to contact the department at a special number where they have an additional chance to take it via telephone. Taxpayers are selected for the Identity Confirmation Quiz when there are irregularities in their information when screened through the LexisNexis identity verification database. Currently, only about 5 percent of taxpayers are selected to take the quiz.

Those selected to take the quiz are not suspected of committing identity theft. Irregularities that may trigger the requirement to take the quiz include the taxpayer having moved very recently and neither the department nor LexisNexis had the updated address; or, a taxpayer may have accidently transposed some numbers of his SSN or street address.

Resources

1. A small handout about this program that you may provide to clients can be found at www.in.gov/dor/5077.
2. Indiana Department of Revenue’s Stop ID Theft website: www.in.gov/dor/4794.htm
3. Indiana Attorney General’s ID Theft Prevention Toolkit: www.in.gov/attorneygeneral
-Click ID Theft Prevention Toolkit in the right navigation menu under Online Resources
4. To learn more about the identity protection program, review the department’s latest Tax Dispatch newsletter at www.in.gov/dor/3659.htm.

These increased security features are designed to prevent identity theft and tax fraud, saving taxpayers and the State of Indiana millions of dollars. Thank you for helping ensure that Indiana taxpayers pay no more and no less than they are required.

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