Assembly passes bill to prevent identity theft

A bill that seeks to protect Virginians from losing their income tax refunds to identity thieves won final approval Wednesday in the General Assembly.
The bill’s sponsor, Del. Mark Keam, D-Vienna, said thieves can steal information from the payroll system of an employer or payroll service and use it to claim a state income tax refund before the real taxpayer files a legitimate return.

“Incidents of cyber hacking and data breach are becoming way too common, and criminals are using every opportunity to prey on innocent Virginians,” Keam said. His legislation, HB 2113, passed unanimously in the state Senate on Wednesday. The bill, which was approved by the House on Feb. 2, now goes to Gov. Terry McAuliffe for his signature.

The measure would require employers to notify the attorney general’s office if they discover that sensitive information about their employee payroll has been compromised. The attorney general’s office then would work with the Virginia Department of Taxation to make sure employees don’t lose their tax refunds to identity thieves.

“To give the government a fighting chance against these criminals, it’s critical that employers notify the attorney general’s office as soon as they discover a breach of their employees’ payroll data so that the Tax Department can prevent fraudulent income tax refunds from being processed,” Keam said.

According to the Department of Taxation, more than 160 fraudulent refunds were issued during the first six months of 2016 as a result of 18 payroll breaches. Once a fraudulent tax refund is issued, it often is impossible to recover, state officials said. Annually, the state loses about $800,000 due to such cases of fraud involving tax refunds.

Paige Tucker, communications specialist with the Virginia Department of Taxation, said identity theft has been a serious problem but her agency is working to stop it. “We are committed to doing our part to prevent refund fraud,” Tucker said. “With the increased sophistication of our fraud models and increased resources devoted to our refund fraud prevention program, we’re seeing positive results.”

To prevent refund fraud, Tucker said, taxpayers should refrain from sending personal information, such as their Social Security number, to unknown people through email or text.