State governments around the country are struggling with tax return identity theft, a problem so rampant that even TurboTax had to temporarily suspend electronic state filing. In Ohio, where 58,000 fraudulent tax returns have been intercepted this tax season, state officials have taken the drastic step of requiring some taxpayers to fill out an online quiz before accepting their returns.
“The Ohio Department of Taxation has intercepted more than $250 million of fraudulent refund claims this year,” the agency said on its website. That’s a huge increase from 10,000 fraudulent returns seeking $8 million last year, according to the Dayton Daily News.
Once a computer determines that something is suspicious about the return, taxpayers are directed toward the “quiz,” which will look a lot like the out-of-wallet challenge questions posed by AnnualCreditReport.com and other sites seeking to authenticate consumers. According to taxpayers who say they’ve been challenged, the questions ask users to confirm streets they’ve lived on, cars they’ve owned, and so on.
“This is changing daily, but as we are still relatively early in the filing season, the Ohio Department of Taxation is opting to be more stringent with the screening of returns,” said Gary Gudmundson, the agency’s communications director. “Of the 1.2 million returns requesting a refund, 49% of those filers/taxpayers … have been directed to take the Identity Confirmation Quiz.”
Users directed to the quiz can expect delays in receiving their tax refunds; how long is unclear. Those who cannot correctly answer the questions can expect additional delays. They will be directed to telephone operators for additional verification.
“Of those who’ve taken the quiz, 95% passed. Those who don’t are asked to submit documentation (copy of driver’s license, birth certificate, utility bills, previous year(s) tax returns, etc.) to prove they are who they say they are,” said Gudmundson.
One user who said she failed to answer correctly wasn’t immediately booted from the system.
“Did it and apparently answered one wrong but they give you another chance,” she wrote on Facebook.
Given the heightened concern about identity theft and tax returns, some residents are worried the challenge questions are part of a scam. Ohio tax officials are telling taxpayers via regular mail that they must complete the quiz.
“If you get a letter, yes it is from the state, not a con,” wrote one Ohio resident on her Facebook page.
For an identity thief to steal your tax return, they need a lot of personal information, including your Social Security number, which can be used to perpetrate all sorts of fraud, even opening new accounts in your name and wrecking your credit in the process. You can spot identity theft quickly by regularly monitoring your credit. You can get your credit reports for free once a year at AnnualCreditReport.com and you can get your credit scores for free every month on Credit.com.