States that Delay Tax Refunds due to Identity Theft

Delay sign
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Identity theft and fraud hit 15.4 million Americans in 2016. Because of this, the government is cracking down on issuing tax refunds to ensure that refunds are going to the right people. ​

The IRS Is Monitoring Tax Fraud

Stopping refund fraud related to identity theft is a top priority for the  Internal Revenue Service. The IRS is focused on preventing, detecting, and resolving identity theft cases as soon as possible.

To that end, the IRS has more 3,000 employees working on identity theft cases, more than twice the number of employees it did a few years ago. The IRS has also trained more than 35,000 employees who work with taxpayers to recognize and provide assistance when identity theft occurs.

How You Become at Risk

Taxpayers can encounter identity theft involving their tax returns in several ways. One instance is where identity thieves try filing fraudulent refund claims using another person's identifying information, which has been stolen. If you live in one of the following states, you may experience a delay receiving your tax refund.

Illinois

The Illinois Department of Revenue started issuing tax refunds in March 2016. "We are taking additional steps to protect Illinois taxpayers from identity theft and fraud," the Department states on their Refund Delay FAQs page. "To ensure the security and confidentiality of taxpayer information, we have initiated a review process to combat against fraudulently filed returns.

As a result of the new security measures, refunds may take longer to process this year than in previous years."

North Dakota

North Dakota will be delaying state tax refunds as part of an effort to prevent fraud. "Refunds may take longer than in the past. With the recent rise in ID theft and tax fraud, additional security checks are in place that may slow processing time," the North Dakota Office of State Tax Commissioner states on their Where's My Refund page.

South Carolina

The South Carolina Department of Revenue (SCDOR) started issuing tax refunds in March 2016 as part of an effort to ensure that refunds are issued to the right people instead of thieves. "The SCDOR’s enhanced fraud detection and prevention measures may lengthen the time it takes to process refunds, particularly at the beginning of the filing season," the Department of Revenue explained in their announcement. "For returns filed prior to March 1, 2016, the SCDOR expects to issue refunds within two to three weeks of March 1, 2016. For returns filed on or after March 1, 2016, refunds are expected to be issued within two to three weeks of the date a return is received."

Delayed refunds are just one of the tools the Department of Revenue is using to fight tax refund fraud. The Department is also using advanced analytical tools to detect fraudulent tax returns. You can learn more about their efforts on their fighting fraud page.

3 Things to Do to Guard Against Identity Theft

  1. Don't carry your Social Security card or any documents with your SSN or Individual Taxpayer Identification Number (ITTIN) on it.
  2. Don't give a business your SSN or ITIN just because they ask for it.
  3. Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change your passwords regularly for all Internet accounts