In Maryland, finding fraudulent state income tax returns is the job of the Comptroller of the Treasury’s office, through that agency’s Bureau of Revenue Estimates’ Questionable Return Detection Team. In years past, the job was overwhelming, with a staff of 20 sifting through around 110,000 potentially fraudulent returns each year.
Years ago, the team turned to analytics software for help, but the first version only captured about 10 percent of fraudulent returns. Over the years, the system has improved, but the team expects this year’s algorithms to be the most accurate yet. The BRE’s director predicts the software will have “about a 65 to 70 percent” success rate at sifting out suspicious returns for team members to review, according to StateScoop.
Using the new algorithms, the team will submit each tax return through a “decision tree model,” which uses data on Maryland citizens to find inconsistencies. If enough inconsistencies pop up in a return, it gets flagged for a more thorough examination.
Of course, 65 to 70 percent still falls far short of 100 percent accuracy, and the QRDT still flags some returns manually.
From the taxpayer perspective, learning that you are being audited or potentially charged with a tax crime can be scary. Nobody wants to hear they could soon be dealing with a big tax bill, and facing criminal charges is definitely bad news.
Fortunately, just because authorities say you owe taxes does not automatically make it true. A tax attorney can help you defend your rights and negotiate a settlement, if that is the best option.