The New York State Department of Taxation and Finance has been recognized with a national technology award for its aggressive identification of fraudulent tax returns.

The Federation of Tax Administrators (FTA) announced that the Department earned the 2014 FTA Award for Technology for its “two pronged” fraud prevention strategy – the ability to marry state-of-the-art technology with highly-trained personnel, improving audit results and saving taxpayers millions of dollars in the process.

The FTA, organized in 1937 as a nonprofit organization, counts among its members the taxation and revenue departments of the 50 states, as well as District of Columbia, New York City and Philadelphia.  Its mission is to improve the standards and methods of tax administration.

The award was presented June 11 at the FTA’s Annual Meeting in St. Petersburg, FL.

“We thank the FTA for recognizing our efforts to detect and prevent fraud,” said Commissioner Thomas H. Mattox.  “It reflects our continuing focus on ensuring timely payment of legitimate tax refunds, while stopping questionable refunds from being paid.”

New York is a leader among states in the use of business analytics, having developed advanced applications to automatically review--prior to issuing refunds--each of the 10 million personal income tax returns it receives annually. As a result, in 2013 alone, more than 255,000 inappropriate refunds were stopped totaling more than $413 million.

Building on that success, the Department established the Fraud Analysis and Selection Team (FAST), which leverages business analytics to stop large-scale, premeditated tax fraud schemes.  Since its formation in late 2011, FAST has uncovered more than a thousand distinct fraudulent refund schemes.  

For example, as a result of the team’s investigation, the Department audited more than 5,000 returns filed by a Bronx tax preparer and stopped or recovered more than $6 million in fraudulent refunds claimed on those returns.  In his guilty plea, the preparer, Joseph Barrios, Jr., agreed to incarceration at Rikers Island.

In less than three years, at a cost of only $600,000, FAST has saved taxpayers from footing the bill for more than $150 million in fraudulent refunds.

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