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Colorado Department of Revenue taking action against increased fraud

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COLORADO SPRINGS -  Tax fraud is a major problem across Colorado this year this tax season.  The Department of Revenue is taking action to protect your money.

The state has been forced to change the way they're issuing refunds. They say they've seen a dramatic increase in stolen identity information being used to file fraudulently. This may explain why many residents are waiting longer than usual to get their return. 

Tax fraud has always been a problem, but it's now growing faster than ever with technology making it easier for identity thieves to take advantage.

"Third party software filing systems have made filing much easier for the public, but it also has made it marginally easier for a fraudsters or an abusers to file multiple returns in multiple states," said John Vecchiarelli the Senior Director of Taxation for the Colorado Department of Revenue.

If you've requested that your state return be direct deposited, you may get a paper check instead. Vecchiarelli says it's a defense against fraudulent returns.

the department of revenue is issuing paper checks.. as a defense against fraudulent returns.. 

"Those accounts that we put into a high risk category, we'll make a determination and in most of those instances, a paper check will be issued and mailed to the address we have on record."

If your account is put into a low risk category, you will be issued your direct deposit as requested.

You should contact the state if you get a check but haven't filed yet or weren't expecting a return so they can investigate. Getting a paper check does not mean your information was compromised.

An apparent breakdown in communication between third-party software, the state and taxpayers has some worried too. News5's executive producer filed his state taxes last month and hasn't yet received his refund. He says the Department of Revenue's website has no record of the filing.

Even if you're using a certified public accountant, make sure you get your financial information to them safely, especially if you're using a computer.

"There's sophisticated stripping software out there to remove the passwords and obtain client information with social security numbers on it," said Judy Kaltenbacher, a partner at Stockman Cast Ryan and Company. Her firm uses secure links and portals to communicate with clients.

She has another piece of advice: file as early as you can.

"If the thief files in January or February and then you file after them, that's when it becomes noticed," she said. "The IRS will deny that second filing." But if you file early, and someone tries to file fraudulently in your name later, their second filing will be denied by the IRS.
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