Colorado revenue department sees increase in fraud
DENVER — Concerns about fraud have led to what the Colorado Department of Revenue called a major undertaking to change the way it issues some tax refunds this year.
In a statement Monday, the department said it had seen an increase during the last month of stolen-identity information being used to file fraudulent tax returns. As a result, some refunds will be issued as paper checks instead of via direct deposit this year. Taxpayers who get checks will receive a letter directing them to contact a fraud hotline if they have not filed a return or are not expecting a refund
The department described the step as a major undertaking, but it would not say how many checks were being sent. Most taxpayers who requested direct deposit of their returns will still be paid electronically, the department said. About half the 2.5 million tax forms received last year resulted in refunds, and 75 percent of taxpayers owed refunds had requested direct deposit payments, the department said.
The department said its own systems have not been compromised and fraudsters are getting identity information from other sources. It cited recent reports about information attacks on private companies.
Among recent breaches, the giant Blue Cross Blue Shield insurer Anthem reported being targeted by information technology attackers in late January, saying hackers gained access to potentially millions of names, birthdates, email address, employment details, Social Security numbers, incomes and street addresses of people who are currently covered or were customers as far back as 2004.
Mass retailers like Target and Home Depot and corporations like Sony Pictures Entertainment also have reported breaches. JPMorgan Chase & Co. said last fall that a huge cyberattack compromised customer information for about 76 million households and 7 million small businesses.
Colorado’s revenue department said it was reviewing all methods of filing, including by paper, and it was not singling out such methods as TurboTax, the country’s most popular do-it-yourself tax preparation software. TurboTax recently temporarily halted the processing of state tax returns because of an increase in fraudulent filings.
Last month, tax officials in Connecticut said they were stepping up safeguards after the problems reported by Anthem and TurboTax.
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