Taxpayers want refund system changed

State: Tax ID quiz stopped fraudulent returns

About 1.5 million people had to take the Ohio Department of Taxation’s identity confirmation quiz this tax season, and the agency says the series of questions helped weed out many fraudulent refund requests.

Deborah Smith, Income Tax Division administrator, said it may be several months before she has a firm estimate for how much fraud was stopped by the quiz, but it could be a big number considering the agency reported stopping $277 million in fraudulent refund requests last tax season by checking refund requests by hand.

Many of those bogus filings came last year between May and October.

Citing security concerns, Smith was reluctant to identify exactly what criteria was used to select the taxpayers chosen to take the quiz.

“It is a constant moving target with these fraudsters,” Smith said. “Every six months we are needing to change our business rules and the manner in which we look at the same components.”

She said the quiz had been under consideration for several years before it was implemented this tax season.

The agency had sent out 3 million e-mails to taxpayers alerting them that they may have to take a quiz to prove their identity and that security measures could delay refunds this year. Smith said 98.5 percent of those who took the quiz passed and were able to receive their refund within three weeks.

But not all refunds came quickly, and there are still more than 1 million income tax returns that have yet to be processed.

Some taxpayers who failed the quiz saw their money delayed while they struggled to navigate the tax system’s website. Julie Barr of Dayton took the quiz online twice and failed, only to be told later by the state that she had to mail in printed copies of documents to prove her identity.

“I was worried and I took it a little personally, even that maybe they were trying to put up barriers to get my tax refund so they could hold on to my money a little bit longer,” Barr said.

Barr finally was able to get her refund only after repeated telephone calls to the tax department. Once she connected with the department, she requested to take the quiz again over the phone. Within minutes, Barr said, she passed, answering questions about her personal life that only she would know.

“I passed the quiz and said ‘Yeah!’ I told the guy I had been trying to pass this quiz and had tried it online and that I was excited I passed. He said that they had been hearing that the phone quizzes were much easier than the online quizzes,” Barr said.

Dayton-based LexisNexis designed the quiz and was working under a one-time contract with the state of Ohio for $3.5 million.

Several other states, including Georgia and Indiana, have similar quizzes. As the current tax season progressed, the state made changes in an effort to streamline the process.

“There have certainly have been opportunities for improvement throughout the season and we have more opportunities that we are working on but probably will not focus on those until May, once we do our best to get all of the refunds out the door,” Smith said.

Will the quiz return next year? Smith said an identity verification process likely will be used.

“It takes awhile to get used to change. But for the 1.5 million people what have been sent to the quiz, the negative feedback that we have received has been quite miniscule.”

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