Analytics making a difference in tax fraud: Kentucky protects taxpayer money, uncovers fraud schemes


According to a 2012 report, it was estimated that over the next five years the US Internal Revenue Service (IRS) will issue more than $20 billion in potentially fraudulent tax refunds. Figures like this do little to boost taxpayers’ confidence in our nation’s tax system.

And tax fraud is not just an IRS issue. States coast to coast are facing similar circumstances. Plagued with identity theft, shrinking budgets and heightened pressure to pay returns quickly, states are having a difficult time cracking down on tax fraud offenders.

Kentucky is stepping up efforts to improve detection of individual income tax compliance issues and save taxpayers’ money, with help from SAS.

“Our job is not just to collect taxes, but to get taxpayers the money they are owed as quickly as possible. The increasing amount of fraud and abuse puts an even greater responsibility on us to be diligent in our efforts. Analytics helps with that,” said Mack Gillim, Executive Director of the Office of Processing and Enforcement for the Kentucky Department of Revenue.

Tax returns that come into the Commonwealth are scored on a nightly basis and any potential issues are flagged for examiners to review the following day. This quick turnaround process is key to the Commonwealth team as they try to get refund checks out to their taxpayers within 14 days.

The department is committed to serving citizens promptly, but that expedience makes it even more critical to be able to quickly spot suspicious returns. Diligent examiners come in first thing in the morning, assess the flagged returns and immediately start investigations.

Using SAS hosted fraud-fighting technology, the Commonwealth’s Department of Revenue has uncovered several fraud schemes. It’s a constant battle for government agencies to keep up with the evolving schemes of dedicated fraudsters. I can’t share all the red flags and anomalies KY DoR looks for as it could help fraudsters adjust their schemes. I can, however, tell you that the metrics have been invaluable in identifying trends that otherwise may have gone unnoticed for a much longer period of time.

As responsible stewards of taxpayer money, the Kentucky Department of Revenue’s use of analytics is making a difference in their vigilant stand against fraud.


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Paula Henderson

Former Executive Vice President & Chief Sales Officer, Americas

Paula Henderson led teams across the Americas in industries such as government, financial services, health care, life sciences, consumer packaged goods, manufacturing, energy and telecommunications. She partnered with industry leaders to create transformational digital solutions designed to modernize and optimize the performance of corporations and communities.

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