State lawmakers hear tax fraud warning

Minnesota’s top tax collector told state lawmakers Tuesday that reinforcements are needed at her agency to head off a growing problem of tax refund fraud.

State Revenue Commissioner Cynthia Bauerly told members of the Senate tax committee that identity thieves are filing phony tax returns in order to get refunds under their victims’ names.

Bauerly’s warning came during testimony on the tax provisions in Gov. Mark Dayton’s supplemental budget proposal. Dayton is seeking $2.6 million in 2017, and $2.1 million a year after that, to fight tax refund fraud. The money would add technology and staff at the Department of Revenue.

Bauerly said tax refund fraud hurts the state budget and individual taxpayers.

“I want to be clear that Minnesota taxpayers who are entitled to refunds will get their refunds. But if a criminal gets in first and files a refund in their name, it’s going to be more difficult for them," she said.

Bauerly said some Minnesota businesses have recently been victimized by an email scam aimed at getting employee tax information. She did not specify the companies or the extent of the breach.

“Unfortunately, very sophisticated companies have fallen victim this,” she said.

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