State battles tax return identity theft


DOVER — Founding Father Benjamin Franklin famously maintained that death and taxes were the only two certainties in life.

State officials can plan on seeing tax refund identity theft cases on a daily basis, too, during filing season.

Describing the number of cases as “steady,” Delaware Division of Revenue Director David Gregor said this week, ”The number of fraudulent returns identified to date appears to be comparable to last year.

“We experienced a dramatic increase in the number of returns received by the Division in 2016. We are still early in the tax filing season and, as a consequence, it is hard to speculate on the number of fraudulent returns that will ultimately be filed with the Division in 2017.”

The Division of Revenue said tax return fraud occurs when someone uses another person’s Social Security number to file a tax return, and claims a fraudulent refund.

Each year, the Division of Revenue “reviews thousands of returns to ensure that they authentic,” Mr. Gregor said.

This year, Delaware and many other states delayed distribution of refunds “in order to allow us more time to ensure that those returns requesting refunds were for the legitimate tax filers,” according to Mr. Gregor.

Also, the state moved up the reporting date for employers to file employee W-2s with the Division to Jan. 31.

“This move allowed us to more readily identify fraudulent returns filed early in the season,” Mr. Gregor said. “With the W-2 information, the Division can compare a taxpayer’s return with his/her employer’s reporting of wages and quickly identify fraudulent returns.”

In a quest to confirm authenticity, the Division of Revenue contacts tax filers — Mr. Gregor described the number of correspondence requests as “significant — to check on their filings.

“DOR staff also communicate regularly with administrators at the IRS and in other states exchanging information about emerging trends and the best techniques for preventing fraud,” Mr. Gregor said.

Taxpayers who fear identity theft on their return should contact the Field Operations Bureau of the Division of Revenue at 856-5358 or 1-800-292-7826.

Preventing payments on improper fraudulent tax refunds is a high priority, the Division of Revenue said.

“I know this to be true as we commit only those who are among our most capable leaders and skilled staff to this task,” Mr. Gregor said.

“This, of course, presents a fundamental trade-off between our responsibility to identify and prevent fraudulent refunds, while still processing legitimate filers’ refunds without significant delays.

“Thus far, we’ve stuck a good balance in this regard.”

Technological advances have allowed identity theft operations to become more sophisticated.

“Criminals have become more adept at exploiting technology to breach security barriers, which allows them to obtain accurate information regarding the victim’s identity and financials,” Mr. Gregor said.

“Spotting phony information is relatively easy, but isolating fraudulent returns that are based on accurate information is much more difficult. This requires trained staff and a more thorough review of returns, which again is at the heart of the trade-off between security and efficiency.”

Mr. Gregor described the audit group that addresses all personal fraudulent refunds activity as “dedicated.” There’s also a criminal investigator on staff that works on the same matters.

When it comes to identity theft, the Division of Revenue said tax filings are the main vehicles that drive criminal activity.

The Division of Revenue outlined a process a defrauded taxpayer or one with suspicions should take in the aftermath.

•The Delaware Division of Revenue at 1-800-292-7826 or directly at 856-5358 to speak with a fraud auditor. Business hours are Monday through Friday from 8 a.m. until 4:30 p.m.

• The IRS Identity Theft Department is available at 1-800-829-8374 or online at

• Contact and place a “fraud alert” on your credit records with the three major credit bureaus:

•Equifax 800-525-6285

•Experian 888-397-3742

•TransUnion 800-680-7289

According to Mr. Gregor, “If the state inadvertently pays a refund on a fraudulent claim and, subsequently, the true taxpayer files a return, the state honors the true taxpayer’s refund claim and the state absorbs the loss for the amount paid as a result of the fraudulent claim.”

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