DENVER (AP) – Colorado officials are carefully reviewing tax returns after seeing an increase in fraud, meaning taxpayers might have to wait longer than usual for refunds, a spokeswoman said Wednesday.
The state Department of Revenue faced a similar challenge last year and responded by mailing paper checks to addresses on record instead of directly depositing some refunds.
The procedure – costly in terms of time as well as money – was prompted by an increase in stolen identity information used to file fraudulent tax returns.
The federal Internal Revenue Service and other states are seeing similar problems, said Verenda Smith, deputy director of the Federation of Tax Administrators, an information-sharing and lobbying group for state tax officials.
In recent years, identity thieves have become more sophisticated, and state revenue authorities have begun discussing the problem more openly, she said.
“You don’t want to be the first one to say, ‘You won’t get a fast refund,'” Smith said. “But taxpayers came to recognize this was to protect them.”
In Colorado, revenue department spokeswoman Ro Silva said some paper checks will be issued this year as was the case last year. In some cases in which fraud is suspected, the refund process will be halted and the taxpayer will be asked to provide additional information.
Taxpayers who get checks will receive a letter directing them to contact the department if they have not filed a return or were not expecting a refund.
Taxpayers who file a correct and complete return in February should expect a refund in 21 days under state law, Silva said. This year, however, some returns could take up to 60 days longer to process.
“Detecting refund fraud has become the new normal,” Silva said, asking taxpayers to be patient. “It’s part of what our society is dealing with.”
Last year, about 85 percent of Colorado taxpayers filed electronically, a method that is convenient for them and the revenue department, Silva said, noting the department had no plans to limit electronic filing.
She and Smith would not elaborate on all the steps being taken by the federal Internal Revenue Service and states for fear of tipping off criminals.
Smith said prosecuting such criminals can be difficult. Many are not in the United States, and they can be hidden behind multiple layers of their own computer security devices.
Instead, she said, tax authorities concentrate on stopping fraud.
Taxpayers can help by taking steps to protect their identities, including creating strong passwords for financial and other computer accounts and changing them often.
– By DONNA BRYSON, AP Writer
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