(INDIANAPOLIS) - More than $78 million in wrongfully requested tax refunds was blocked by the Indiana Department of Revenue during the 2014 tax season, including $39 million in attempted identity theft, and $39 million in unearned tax credits and deductions.
The department's Special Investigations Unit (SIU) confirmed more than 39,000 returns as attempted identity theft this year, compared with approximately 1,500 cases of identity theft stopped in 2013. These fraudulent returns include those in which criminals manufactured false identities with stolen elements of identity information and returns in which actual taxpayers' identities were stolen and fraudulent refunds were requested in their names.
The department is working to hold these criminals responsible for the identity theft and prevent them from stealing money from Indiana in the future. A number of active cases are under investigation and the department expects to present cases to prosecutors by the end of 2014.
The department also adjusted $39 million in inappropriately claimed tax credits and deductions. These were claimed by legitimate taxpayers on Indiana income tax returns, but were not substantiated.
In these instances, taxpayers did not meet the requirements for the requested credit or deduction, so the department adjusted the tax return to the proper amount. This sometimes resulted in a refund request becoming an amount still owed to the state.
Some of these adjustments were the result of taxpayers' honest mistakes, while others may be intentional tax cheats. In these cases, additional investigations continue.
The attempted fraud through identity theft was discovered by the department's increased security activities during the 2014 tax filing process. Of the returns checked for verification, 95 percent of taxpayers' information was verified and the returns continued processing as usual.
As an additional level of protection, 30,000 taxpayers took an Identity Confirmation Quiz to help the department confirm their identities. Most survey respondents said the quiz was easy and quick to take, and many expressed appreciation for the additional level of protection.
Preventing identity theft will not stop with this year's success. The department will use this year's experience to stop attritional potential identity theft and tax fraud in the 2015 tax season and beyond.
Hoosiers with questions about protecting their identities can visit the department's Stop ID Theft website at www.in.gov/dor/4794.htm for frequently asked questions, identity protection tips, a video and additional resources. Hoosiers can also sign up for the Attorney General's ID Theft Protection Tool Kit at www.in.gov/attorneygeneral/2853.htm.
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