The Vermont Department of Taxes will resume issuing tax refund checks beginning Thursday, February12. As a precaution, the department temporarily halted all refunds late last week in order to further investigate a surge in tax refund fraud reported by other states. The increase in refund fraud is not related to any security breach of Vermont government systems but rather the use of identities stolen elsewhere.
Refund fraud has been growing at an alarming rate at the federal and state levels. In 2014, the department detected and stopped more than 800 fraudulent returns saving the state of Vermont more than $1.5 million in potential loss. In response, the department has expanded its fraud detection efforts for the 2015 filing season, working with internal and external partners to add filters to the department’s fraud detection systems.
“Our focus is to lessen the impact of identity theft on Vermonters,” said Tax Commissioner Mary Peterson. “We are working to ensure Vermont tax dollars go to the rightful recipients and stay out of the hands of criminals. In addition to increasing the number of safeguards to our systems, we are in regular contact with software vendors, revenue departments in other states and the IRS to share information, such as new ways criminals have developed to commit fraud.”
Although much of the screening is done through electronic processes, there is also a great deal of manual review and follow-up conducted by department staff. While all staff are tasked to be watchful for fraud, the department has allocated additional staff to work on fraud detection full-time. Staff manually review individual returns that have been flagged electronically to determine which returns are fraudulent and to pay legitimate requests for refunds as quickly as possible. However, the department does anticipate that the increased screening necessary this year will slow refunds throughout the tax season.
One of the new precautions the department is implementing is to distribute refunds by paper checks for certain returns even if the taxpayer requests an electronic direct deposit. Criminals who file fraudulent returns typically request direct deposit of the refunds to debit cards which are difficult to trace. If you receive a refund by paper check but have not filed your taxes, you should report this to the department as soon as possible and return the check. This indicates that someone has filed a fraudulent return in your name.Peterson said that individuals should be aware of the identity theft threats and learn about the various scams criminals will use to obtain personal information. To learn more about identity theft and how to respond to identity theft, see the information available on the department’s website athttp://www.state.vt.us/tax/idtheft.shtmland the IRS website athttp://www.irs.gov/Individuals/Identity-Protection. Peterson emphasized that e-filing remains the best means of filing tax returns and urged taxpayers to continue filing as early as possible.
If you believe you have become a victim of identity theft, you may complete the IRS Identity Theft Affidavit (Form 14039,http://www.irs.gov/pub/irs-pdf/f14039.pdf), and submit it to the IRS and the department. You also should notify the department by calling802-828-2865or866-828-2865(toll-free in Vermont).
Source: Montpelier, Vt.,Feb. 12, 2015—The Vermont Department of Taxes