State admits to delaying income tax refunds, new fraud and identity theft algorithm

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MONTGOMERY, Ala. ( -The state of Alabama slowed about 100,000 tax refunds this year because of a new computer algorithm designed to detect fraud and identity theft.

That meant some tax refunds have gone longer than normal in getting returned to Alabama taxpayers, and will be paid with 3 percent interest, as required by law.

State Revenue Commissioner Julie Magee said she would rather pay interest to taxpayers for delayed refunds than make payments to ID thieves, who can be people who live in other nations. She said in the past, ID thieves would target federal income-tax refunds, but they have expanded operations to state refunds.

The ID thieves are old foes in the credit-card industry, but they have stepped up their efforts to steal state refunds across the nation.

The Alabama Department of Revenue, in response to fraud, installed a new computer program to watch for fraud clues. It slowed down as many as 100,000 personal income-tax tax refunds this year, Magee said, using a variety of “filters.”

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