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Idaho sees increase in fraudulent tax returns

Idaho Tax Commission Building. File Photo.

Idaho Tax Commission Building. File Photo.

The Idaho State Tax Commission is fighting a recent spike in tax fraud.

The commission saw a 64 percent increase in tax fraud from 2014 to 2015 because of stolen identities, commission spokeswoman Renee Eymann said.

“Criminals are using information they have collected to file fraudulent returns in hopes of getting a refund,” Eymann said.

The State Tax Commission implemented a new type of software this year that monitors tax returns and flags suspicious ones. The commission then sends letters asking taxpayers to verify they filed their own taxes by sending in documents or taking a quiz online.

Eymann said the commission goes through a fraud review each year.
But “it is becoming more prevalent, though, and happening to more people,” she said of fraud.

Ken Roberts

Ken Roberts

Last year the commission stopped more than $1 million worth of fraudulent claims, but it is unclear if that was because the commission is getting better at tracking fraud.

“I think it is a combination of the tools we keep improving, but I also think that possibly there is just more of it occurring,” Eymann said.

Idaho isn’t the only state working to curb fraud. Arizona, Kentucky and Ohio have all seen large increases in fraud rates and Kentucky, Montana, Ohio and South Carolina have launched new programs to combat fraud.

Idaho has sent more than 16,000 verification letters to taxpayers this year and has stopped about $400,000 worth of fraudulent claims; $360,000 of that stemmed from stolen identities. The Idaho State Tax Commission processes more than 500,000 refund requests each year, Idaho State Tax Commission Chairman Ken Roberts said.

About Benton Alexander Smith

Benton Alexander Smith is a reporter for the Idaho Business Review, covering the Idaho Legislature, new business, technology and financial services.