State saves $30M through fraud prevention, tax review effortsBigger savings expected next year
The state Department of Revenue today said that contract savings and a new fraud investigation unit helped save commonwealth taxpayers nearly $30 million in the last fiscal year.
Revenue Secretary Dan Hassell said a renegotiated software contract, which included moving to a flat annual fee from a contingent fee arrangement, saved the department $5.6 million.
Meanwhile, the department's fraud investigation unit, which was created last year and has a staff of eight people, discovered through income tax reviews about $23.7 million in tax refunds that were fraudulent, erroneously filed or in need of adjustment.
The Department of Revenue processes more than six million personal income tax returns each year.
The majority of fraudulent and erroneous refund filings contain overstated expenses and incorrectly reported wages or withholdings from W-2 forms, officials said. So far this year, more than 61,000 returns have been flagged for review, which is up from 31,336 last year.
In 2015, the department flagged 8,521 returns, while 1,132 were reviewed in 2014.
Officials said additional steps are being taken, including identity verification quizzes, to prevent identity theft in Pennsylvania. More than 56,000 identity validation letters have been sent to taxpayers so far this year.
The department expects to save at least $80.5 million through 2018-19 because of the new annual software contract and increased review process.