January 2018

Alabama launches electronic ID to combat state tax refund fraud

Identity theft and data hacks are ongoing problems nationwide. According to the Internal Revenue Service (IRS), tax-related identity theft continues to be among the top scams, with hundreds of thousands of taxpayers reporting stolen returns each year—even with certain safeguards and precautions in place.

Criminals will file a fake tax return in advance of the actual taxpayer, usually as tax filing opens, and steal the refund. By the time the IRS or state government discovers a return is fraudulent, the refund has already been issued to the fraudster and the taxpayer still needs to be paid. This results in the loss of billions of government dollars each year.

eID Tax Pilot

As the tax refund theft continued to increase, IDEMIA (formerly MorphoTrust USA) saw the need to offer taxpayers a more secure and resilient means of protecting themselves from this type of identity crime, says Mark DiFraia, senior director of digital credentials and ecosystems at IDEMIA.

Funded by a grant from the National Institute of Standards and Technology (NIST), IDEMIA defined a pilot initiative to demonstrate how a trusted electronic ID (eID) would empower taxpayers to prevent state personal income tax refund theft from happening to them.

To join in the efforts of combating tax fraud, the Alabama Department of Revenue partnered with IDEMIA in 2016 for their own pilot. “We wanted to be a part of it,” says Brenda Coone, deputy commissioner of the Alabama Department of Revenue. “We’re constantly trying to find ways to retool our initiatives to combat tax fraud, and IDEMIA’s eID is a revolutionary technology.”

The Alabama Department of Revenue worked with IDEMIA to test the security features of the eID process to make sure it couldn’t be easily spoofed or hacked. In April 2017, the eID tax pilot was launched in Alabama.

What Is It?

The eID app is a service allowing consumers to create a personal online credential that is authenticated by driver’s license issuing agencies—in this case, Alabama’s Law Enforcement Agency (ALEA).

“IDEMIA’s eID enables users to verify their identity with commercial and government entities online—a process that previously happened in-person using secure government documents,” DiFraia says. “With an eID, users have a secure tool to present themselves online in a way nobody else can.”

The eID app uses biometric technology as a key layer of security. No logins or passwords are necessary. Instead, users unlock the app using facial recognition to access their eID. The built-in liveness verification technology ensures that that a “live person” is in control of their eID, and no one can use the app fraudulently using a photograph or video.

The Inner Workings

To complete the eID setup, individuals must:

  • Download the free IDEMIA eID app from the Apple App Store.
  • Once inside the app, take a photo of the front and back of their driver’s license or state ID.
  • Take a self-photo, or “selfie.”


At this point, ALEA validates the driver’s license data through its system and verifies the self-photo matches the person in the driver’s license system. In parallel, another service determines if the user’s driver license is an authentic document.

Once the app is set up, users register the eID with the Alabama Department of Revenue at A QR code is generated so the user can scan the code using the IDEMIA eID app on their smartphone.

From then on, whenever a state tax return is filed for the eID holder, the Department of Revenue will send a notification through the app to confirm that the correct individual filed that return. If the transaction is not confirmed, the Department of Revenue will treat the filed return as fraudulent and will not process it.

“This app empowers taxpayers to secure their state income tax refund,” says Coone. “It’s simple, it’s secure, and it’s an excellent tool to help give you peace of mind.”

Next Steps

Currently, only the iOS version of the app is available, but the Android version is in development for the 2017 tax season, says Coone.

The Alabama Department of Revenue also hopes to have the ability to validate out-of-state driver’s licenses as well, since many residents do not have an Alabama driver’s license or ID card.