Fighting tax fraud with electronic IDs
Connecting state and local government leaders
Several states are testing a program that leverages the authentication derived from driver's licenses to ensure tax refunds are sent to their rightful owners.
Driver’s licenses are the gold standard for verifying an identity because it contains an image of the cardholder and requires several forms of identification to obtain. Several states are leveraging the authentication embodied in the license cards to ensure tax refunds are sent to their rightful owners.
When MorphoTrust originally approached Georgia about implementing identification authentication technology for tax returns, tax fraud “was a really juicy problem and growing,” Mark DiFraia, the senior director of digital credentials at MorphoTrust, told GCN after talking about the pilot project at the National Association of State CIOs conference on April 25.
Funding for the initiative came from the National Institute of Standards and Technology’s Trusted Identities Group, which supported projects that could show how to leverage trust produced through the online driver licensing process – including enrollment, verification, authentication and validation – to create trustworthy electronic IDs that use biometric information.
The Georgia project will allow citizens to use an app to authenticate their identities before their tax return is processed.
The MorphoTrust app takes advantage of the in-person verification done for driver’s licenses and makes it accessible to the Georgia Department of Revenue to use for securing tax refunds. That gives the state “a high confidence in who you are,” said Georgia CTO Steve Nichols.
After downloading the app, users confirm their phone number using SMS authentication. Next they submit pictures of both sides of their driver’s licenses, and the system compares the images to a document verification library that MorphoTrust owns and manages. “We can basically decide whether or not we think the document is real or fake based on the security features embedded in it,” DiFraia said.
Then the user submits a selfie. Both the selfie and the data on the back of the driver’s license are sent to the Georgia Department of Driver Services, which then compares the selfie to the driver’s license image in the Georgia license database. When everything matches up, an electronic ID is issued.
MorphoTrust said that all matching or data storage is done within Georgia’s data center or the user’s device.
To connect the app to the state’s Department of Revenue, users with a MorphoTrust eID visit the DOR website and opt into the authentication program, after which a QR code appears on screen. Users will again take a selfie to open and authenticate their eID and then will scan the QR code, connecting their profile to DOR.
Now, when taxes are filed in the name of someone with an eID, that person is notified through the app and can authorize it for processing. “We’re actually giving the user the power to see into the transaction before DOR even processes it,” DiFraia said.
“In a perfect world where everything is in place, you’d want to do this before tax season even starts,” DiFraia said.
DiFraia said that Alabama is working on a similar pilot, and officials there are planning to incentivize use by providing quicker returns for people who use it. But Georgia hasn’t decided if or how it will incentivize use of the app, Nichols said.
Nichols acknowledged that not everyone has a smartphone, let alone a driver’s license, so “other solutions will have to be found for those populations.” He said the app could be ready for next tax season, depending on the results of the small pilot.