Case Studies
Idaho State Tax Commission
How the Idaho State Tax Commission Helped Reduce Fraud with IDR
Withholding fraud is a highly recognized problem in the tax systems so the Idaho State Tax Commission addressed the issue by implementing Intelligent Document Recognition technology.
The Business
The Idaho State Tax Commission, headquartered in Boise, the state capital, administers the state’s tax laws and collects taxes and fees either electronically or through mail-in or drop-in payments. Taxes include, but are not limited to, Income (Corporate, Individual and Withholding), Sales, Beer/Wine/Tobacco/Cigarette, and Fuels. The Commission serves approximately 1.7 million individuals and 60,000 employer accounts.
The Challenge
Withholding fraud is a highly recognized problem in tax systems. Fraudulent filers steal thousands of dollars from states each year. The electronic filing of individual income tax returns has increased the exposure for potential fraud. Individuals who prepare and electronically file their own returns have the ability to falsify W-2 withholding amounts. Employers, who withhold and pay one amount may create and file W-2s for different amounts with the state governments.
The ability to match withholding information from an employee income tax return to the employer wage and withholding information submitted by employers is long overdue. While states have looked to the IRS and SSA to provide combined electronic reporting of wage and withholding information, there is no current plan in the foreseeable future for them to do this.