Valuation & Litigation Services Blog


Ohio Department of Taxation Brings Back the ID Confirmation Quiz

Recently, the State of Ohio Department of Taxation announced that it is bringing back the ID Confirmation Quiz for the upcoming 2015 income tax filing season for individual taxpayers who receive income tax refunds.  Identity theft continues to plague income tax agencies at the federal and state levels.

Income tax refund fraud has exploded since 2012 when there was “only” $10 million of fraudulent income tax refund claims.  While that is a pretty significant number of fraudulent income tax refund claims, in 2013 the amount increased to about $277 million.  That startling jump forced the State of Ohio Department of Taxation to take action.  Their response was the implementation of the ID Confirmation Quiz.

In 2014, and in an effort to combat the skyrocketing income tax refund fraud attempts in 2013, the Ohio Department of Taxation instituted the ID Confirmation Quiz wherein individual taxpayers receiving an income tax refund were required to answer three out of four questions correctly. The questions were generated from a credit reporting database, available public real estate records, and the Ohio Bureau of Motor Vehicles.

At the onset of the program, many taxpayers complained that many of the questions were too difficult or were derived from transactions a decade ago.  Some failed.  It was especially difficult for some of the elderly.  Worst case, the taxpayer failed the quiz and then was required to mail in copies of documents establishing their identity.  Income tax refunds were delayed, upsetting taxpayers who voiced their concerns to legislators.

There was a legislative push to amend the ID Confirmation Quiz program to limit the questions used to the past five years, but that proposal was vetoed by Ohio Governor John Kasich.

The results were immediately obvious and the statistics quelled consumer complaints (and legislators).  Through 11 months of 2015, the State of Ohio Department of Taxation stopped about $160 million of fraudulent income tax refund claims.  The program was successful.   Since 2014, the State of Ohio has blocked 297,000 fraudulent income tax refunds requests.  These fraudulent returns would have paid $534 million had they been approved.  The ID Confirmation Quiz was directly responsible for preventing millions of fraudulent refunds from being processed.  Despite the State’s best anti-fraud efforts, it is estimated that income tax refund fraud still cost Ohioans $28 million in 2014.

Income tax refund fraud usually occurs in the first three months of the year before taxpayers have filed federal and state income tax returns.  We highly recommend filing your income taxes as early as possible.  Don’t procrastinate!  The ID theft criminals file early.  Shouldn’t you?

Forty three states have state income taxes.  One person with criminal intent can potentially file fraudulent income tax returns using your information in every one of these states.

For more information on the Ohio ID Confirmation Quiz, or other identity theft topics, please contact Frank Suponcic, CPA, CFE, CFF, at 440-449-6800.

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