New York, IBM team up to stop false tax refunds

New York state announced Friday that it had stopped $400 million in questionable 2010 tax returns from being disbursed, with the help of IBM technology.

Officials from both IBM and New York’s tax commission said, in the long run, it was much easier to prevent fraudulent refunds from going out than trying to recapture that lost money. 

The officials also said the analytics used by New York give the state better defense against false tax returns filed by prisoners and others. In all, IBM’s Shaun Barry said, the partnership has saved $1.6 billion over seven years.

“It’s exceeded anybody’s expectations,” said Barry, IBM’s global leader for fraud-management solutions. “What’s interesting is that New York is now finding people switching to other schemes because of this.”

New York and IBM had earlier announced that analytics had helped the state collect $83 million in taxes. 

The latest announcement comes as many states continue to struggle with difficult budget situations. 

Thomas Mattox, New York’s tax commissioner, told The Hill that, while his state’s diverse population provided tax collection challenges not found in some other places, he believes the sort of analytics now on display in New York could be applied elsewhere.

“The core infrastructure around leveraging analytics – you can absolutely do that among all 50 states,” Mattox said. “I think it’s in all of our interests to see a broader adoption of these kinds of tool sets.”