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Tax fraud screening aims to save state $8.5 million

By Johanna Somers

Publication: The Day

Published December 29. 2012 4:00AM   Updated December 29. 2012 7:33PM
Officials also offer tips for taxpayers to avoid identity theft

Hartford - The commissioner of revenue services and the attorney general plan to save the state $8.5 million by screening for fraudulent tax refunds this fiscal year, thanks to a new initiative supported by the General Assembly.

Whether the department can save an additional $1 million in Earned Income Tax Credit fraud as proposed in the deficit mitigation bill last week is another question.

"While I am skeptical that there is another million dollars in that initiative, I am committed to the $8.5 million that we did propose could be saved though a general program of enhanced screening for fraud and theft," said Kevin B. Sullivan, revenue services commissioner.

In 2012, the department stopped more than $7 million in fraudulent refunds. "But cyber criminals become more sophisticated all the time," Sullivan said.

He and Attorney General George Jepsen explained their efforts to prevent fraud and provided ways for citizens to avoid becoming victims of tax fraud and identity theft.

Links to free credit reports and identity theft prevention were added to the department's website and its call center was improved, Sullivan said. The department also has asked for about $500,000 from the State Bond Commission to improve hardware and software needed to protect taxpayer identity.

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Most importantly, taxpayers should file early, especially if there has been a death in the family, Sullivan said.

The federal government releases a taxpayer's identity and Social Security information at the time of death, he said.

"Data becomes available and, needless to say, crooks are quick to jump on that," Sullivan said. "One of the biggest forms of identity theft in tax fraud are simply individuals filing as quickly as possible on the basis of stolen information before you ever get around to doing it."

That person gets to claim a refund in someone else's name and a check is issued, he said.

It is also important for people who have their taxes prepared by a "fly-by-night preparer" to read every word of the completed tax form before they sign anything. Taxpayers should know who and what are being claimed and should verify that the refund is being sent directly to them, not to the entity preparing the return, he said.

Other ways to protect oneself include:

• When asked to give out a Social Security number or tax ID number, ask why it is needed. In many cases, it is not required.

• Shred papers with account numbers or other personal information.

• Put mail that contains sensitive financial information in a post office drop box or go to the post office.

• Select secure passwords or personal identification numbers and guard these codes from public view when using them.

• Do not give personal information over the phone or in an email unless you are confident of the security.

• Verify contact information to make sure you are on an official website before giving out your personal information.

• Never type personal information into an insecure website. A website without an "s" after the http in the address bar is not secure, Jepsen said.

• Do not carry your Social Security card in your wallet or purse.

If someone's personal information has been compromised, he or she should quickly file a police report, contact bank and credit card companies and place a fraud alert on his or her file with one of the three credit bureaus, Jepsen said.

Earned income fraud

Sullivan said he is "skeptical" of finding $1 million worth of tax fraud in the state Earned Income Tax Credit created last year. "The revenue mitigation package reflects the negotiation of the governor's office and the four (party) caucuses," Sullivan said.

"And for some interesting reason, ever since working poor families received the
EITC benefit, some portions of the Republican caucuses have had concern about taxpayer fraud."

The tax credit was designed to help low-income working families, who pay a greater percentage of their disposable income in income tax, sales and property taxes than higher wage earners do, according to a revenue department press release. The credit is intended to help low-income working families pay for items such as medical care, car repairs and clothing for their children.

James Horan, executive director of the Connecticut Association for Human Services, told The Connecticut Mirror website, "it would be incorrect to imply significant fraud exists in the new system."

"It was very political that this was put in the final agreement," he said.

Pat O'Neil, spokesman for the House Republican caucus, said Republicans opposed this program in general and proposed heightened "fraud catching."

"This is one of the most abused, fraudulent programs on the federal level in the last decades," O'Neil said. "That is why it became a red flag. That is why it was put in the bipartisan debt mitigation bill."

Sullivan said he has not seen any evidence of fraud in the program, but that he is "committed to the secretary and the Office of Policy Management to the best efforts of my department to reach whatever that budget number is."

j.somers@theday.com

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