Tax & Accounting Blog

States Implement New Identity Verification Requirement for E-Filed Tax Returns

CS Tax & Asset Management Solutions, State & Local Tax, Tax February 9, 2016

In the ongoing effort to combat widespread identity theft and the fraudulent filing of tax returns, many states will now require taxpayers to provide a new piece of personal identification: their driver’s license number (DLN). Some states may also request related information, such as the issuing state, date of issue and expiration date.

As a result, tax preparers should get ready now to begin collecting this information when needed, so they can avoid unnecessary delays in filing client tax returns.

For one state, Alabama, the collection of the DLN and related information is required in order to e-file individual tax returns. With the exception of Minnesota (which has yet to issue a requirement for this additional information), all other states with an individual income tax will request that practitioners and tax preparers provide this information, but it’s not a mandate at the moment.

Although most states haven’t yet made the DLN a mandatory entry for electronic filing purposes, practitioners may want to begin collecting this information now with the expectation that some or all states may require the DLN in future tax years (plus you can benefit from the data automatically rolling forward into those future years!).

Rest assured that both Thomson Reuters tax compliance systems—UltraTax CS and GoSystem Tax RS—have been updated for the 2015 tax year to request the DLN and related information, where applicable.