Connecticut officials verifying fraudulent returns not submitted, slowing income tax refunds

Some Connecticut taxpayers might receive income tax refunds a few weeks later than expected as state revenue officials verify that fraudulent returns are not being submitted.

Kevin Sullivan, commissioner of the Department of Revenue Services, said the agency has narrowed questionable refunds to less than 1 percent of those requested. He did not say how many refunds are involved.

"It's better to get it back late rather than not all," he said. "One thing taxpayers may have to learn to live with is slower refunds and greater security."

Sullivan said officials responded in part after hackers broke into a database of insurer Anthem Inc. that held information of about 80 million people and TurboTax, the country's most popular do-it-yourself tax preparation software, temporarily halted the processing of state tax returns because of an increase in fraudulent filings.

Verification letters will be sent to the taxpayer's address on file and will direct taxpayers to the DRS website at www.ct.gov/DRS .

Sullivan said the agency has received several calls and emails from people who say they did not file a 2014 state income tax return but received a check.

Federal and state tax officials blame breaches, identity theft, phishing and other forms of cybercrime for attempts to fraudulently claim refunds.

To help combat the problem, Connecticut tax officials are issuing refunds in the form of checks, rather than direct deposit, to first-time tax filers. An electronic deposit is "gone instantaneously," Sullivan said.

Verenda Smith, deputy director at the Federation of Tax Administrators, said the association of state and municipal tax agencies speaks monthly with state tax officials to share information on finding and stopping tax fraud.

Data breaches add to the problem, she said.

"The more information on you that's out there and has been stolen the more somebody is in the market for buying stolen information they can use to make fake returns more legitimate," Smith said.