State slows income tax refunds because of IRS data breach

If it seems like it has taken a little longer to get your state income tax refund than in the past, Georgia officials say you can blame the IRS.

Or more precisely, you can blame crooks hacking into the IRS system.

Gov. Nathan Deal’s office said Georgia’s Department of Revenue slowed refunds in February as the state implemented a fraud management system and increased scrutiny of returns because of an IRS data breach.

Last year criminals used a tool on the IRS website to steal the tax forms of more than 700,000 people. Then in February, identity thieves tried to breach computer systems at the IRS to file for fraudulent refunds. The IRS said it halted the attack and no taxpayer data was compromised.

Because of the problems, the Georgia Department of Revenue began giving state returns more scrutiny to catch any fraudulently filed forms.

Deal’s office broke the news Friday to explain why tax collections for the month were up by almost a third in February over February 2015.

That amounted to an extra $300 million in tax collections over the same month last year.

But $51 million of that is because the General Assembly increased gas taxes last year, starting July 1.

And individual income tax revenue jumped 72.5 percent, or $214 million, because of the delays in getting refunds out. That will even out this month as the state cranks out refunds to make up for the slower February period.

The biggest downer for state may have been its sales tax numbers. Gross sales tax collections were down 2 percent, and they are up only 1.1 percent for the first eight months of the fiscal year.

That may raise concerns among economists and state finance officials. Income and sales tax collections make up the majority of money the state takes in to fund its budget, which helps pay for K12 schools, universities, public health programs, prisons and a host of other services.

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