Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

Why do you need my driver’s license for my tax return?

driver's license, tax return, CPA, IRS, tax preparer, taxYou probably asked this question when you met with your tax return preparer this year. How could your tax return and your driver’s license possibly be connected? Well, several states have added a request or a requirement for a driver’s license number (or other state identification number) to be entered into the tax software system for the return to be electronically filed. This information helps the states confirm the identity of taxpayers, which aids in reducing identity theft.

The IRS has been working with state tax agencies and the tax industry to strengthen safeguards that protect you from identity theft. The thinking is that a thief could have your name and Social Security number, but they probably do not also have your driver license number. States match the information in their database to confirm the identity of the taxpayer, helping to prevent fraud.

Currently, you do not need a driver’s license to file your federal tax return but you may need it to file with some states. States requesting this information have the ability to match driver’s license information and other identifying records to help confirm your identity. At this time only Alabama, Ohio and New York require the driver’s license to electronically file your tax return. California, Kansas, Louisiana, New Jersey, Pennsylvania, Virginia and Wisconsin are requesting (but not requiring) the information.

The IRS, the states and the tax industry are sharing and analyzing data that will help them spot identity theft returns. Tax software providers are sharing with the IRS general tax return information and other data elements from the tax software that indicate potential fraudulent patterns occurring during return preparation. This is one more way the IRS, the states and the tax industry can identify fraudulent tax returns that thieves file using your name and Social Security number.

The IRS and state policies are constantly changing so be prepared to include your driver’s license or state identification number in the documents you normally provide to your tax return preparer.

Pamela Wheeler, EA