For Immediate Release - September 23, 2014

Department of Revenue Working to Protect Taxpayer Identities and Save the Commonwealth Money

New refund fraud prevention tool put in place this week

(Boston, MA) - The Massachusetts Department of Revenue (DOR) added a new taxpayer identity verification process this week to help combat tax refund fraud. DOR prevented more than $24 million in attempted identity and tax fraud during this past filing season, up from $20 million in 2012 and nearly $15 million in 2011.

“The Commonwealth is dedicated to protecting taxpayers from identity theft.” said Commissioner Amy Pitter. “DOR has extensive safeguards in place to protect taxpayers. In addition to our system of automated filters, we have 35 Audit Bureau staff working exclusively on detecting fraud, and we regularly sample returns to detect patterns that may indicate fraud. The identity quiz is just one more step we are taking to increase data security and protect taxpayers.”

With identity fraud on the rise, the Department is intensifying its security measures with the addition of a process that identifies tax returns where a refund is due that may require additional verification. Once a return is identified, the taxpayer listed on the return will be notified by mail and asked to complete a short, secure online quiz made up of personalized questions to confirm the taxpayer’s identity. When the quiz is successfully completed, processing of the refund will continue. The first notices were sent to taxpayers earlier this month.

With extensive fraud detection already in place at the Department, it is expected that a very small number of taxpayers will be impacted by the new program and that most refunds will be processed without interruption. Taxpayers who receive a notice indicating their return was selected for confirmation should be able to complete the online quiz in less than three minutes.

The U.S. Treasury Inspector General for Tax Administration estimated in a 2012 report that the IRS could potentially issue $21 billion of fraudulent refunds by 2017 due to identity theft. States are being impacted as well. The Massachusetts Department of Revenue will continue to enhance controls and employ new tools like the identification verification process to combat fraud for the Commonwealth, and together with the Office of Consumer Affairs and Business Regulation, will continue to educate Massachusetts residents about the best ways to safeguard their personal information and proactively prevent identity theft.