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State may spend $5M to catch tax cheats
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ATLANTA — In a rough economy, Georgia’s leaders are looking to collect every nickel owed to the state.
A budget proposal from Gov. Nathan Deal would spend roughly $5 million annually on a first-of-its-kind database meant to identify people who steal the identities of others and use that information to falsely claim tax rebates from Georgia authorities. The budget plan, which received initial approval from House lawmakers, now is under review by the state Senate.
“If everyone pays what they rightfully owe, we can all pay less,” said Rep. Larry O’Neal, R-Bonaire, the House majority leader and a proponent of tightening tax enforcement.
Every tax dollar has become increasingly precious since the state’s economy withered during the deepest recession since the Great Depression. As people lost jobs, earned less income and bought fewer goods and services, the state’s tax income dried up. State lawmakers have trimmed billions in spending, creating political struggles to claim what is left.
In the past two years, the Legislature has approved hiring more than 200 auditors, fraud analysts and agents to crack down on people who do not pay taxes or fail to pay enough.
Now, state officials are focused on using technology to prevent the state from paying out bogus tax rebates. For example, two years ago a cluster of people around Montgomery, Ala., used personal information taken from inmates — people who were not filing tax returns — to claim false tax rebates in Georgia, said Staci Guest, director of the Office of Special Investigations for the Georgia Department of Revenue.
Those filing for fraudulent tax rebates typically use stolen personal information from another person and file fake returns early in the year. By the time the rightful owner seeks his rebate from the state, there can be trouble if the rebate has already been paid to a fraudster.
A pilot program launched in January aims to prevent that problem by contracting with an outside vendor who electronically compares information taken from tax returns with data available in some 20,000 databases, Guest said.
If the vendor detects a problem — for example, names, addresses or Social Security numbers that do not match — the refunds are automatically referred to tax officials for more scrutiny. Those submitting flagged returns will be required to answer questions about themselves to prove their identities using either an Internet site or a special phone line.

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