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Vermont will pay a $250,000 insurance deductible for identity protection services promised to people who received 1099-G tax forms from the state Department of Labor starting on Feb. 1.
Gov. Phil Scott said at his press conference Tuesday that the state’s insurance plan will cover most of the cost of the identity protection service, which is aimed at helping people whose Social Security numbers and other information were sent to the wrong addresses in late January.
The labor department printed 180,000 faulty 1099s, but only a fraction of those were mailed out, and only about 45,000 people are believed to have received the wrong information.
Thousands of Social Security numbers have ended up in the wrong hands, opening the door to fraud and identity theft.
Identity protection services will be made available to every person who received a 1099 from the labor department, Scott said. Many people were due to receive more than one 1099 from the department, meaning there are far fewer than 180,000 individuals involved.
“They’ll be able to enroll in the identity protection services by next week, if not sooner, and at no cost,” the governor said.
The labor department plans to mail out instructions in the coming days. Scott urged all claimants to sign up for the protection which is retroactive to the date of the breach.
“My hope is that this will provide some reassurance,” he said. “Though I know it doesn’t come close to making up for the harm and worry that this has caused Vermonters.”
Officials at the department of labor became aware there had been a data breach Feb. 1, when they started hearing from unemployment insurance recipients who had received the wrong information. The department has asked that all of the 1099s it mailed out to be returned and is printing new ones. Labor Commissioner Mike Harrington said he wants the new 1099s to go out by the week of Feb. 22.
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Harrington told the Senate Committee on Economic Development Tuesday that the new 1099s will undergo automated and manual accuracy checks.
“We put in multiple checkpoints in our validation process, some automated, some manual, to make sure there are eyes on the 1099s at every step of the way, including right before they go out in the mail, and that will certainly catch any major issues,” he said.
The department is also working with the tax department on other checking and validation measures.
The governor’s office stepped in Feb. 3 to help the labor department manage the impact of the data breach. Scott appointed two teams to help recover the incorrect forms and issue the correct ones, to improve communication about the breach and respond to Vermonters and lawmakers. The governor’s Deputy Chief of Staff Brittney Wilson is overseeing the effort. Scott also asked State Auditor Doug Hoffer to audit the department to identify the root cause of the error and examine quality control improvements. Scott also appointed a senior adviser, former State Senator Dustin Degree, as deputy commissioner at the department.
After the breach was discovered Feb. 1, Sen. Party: DEMOCRATIC
Residence: SOUTH BURLINGTON, VT
View all legislator information” href=”https://vtdigger.org/glossary/michael-sirotkin/”>Michael Sirotkin, D-Chittenden, told Harrington the department must improve the quality of email and printed communication.
On Tuesday, Sirotkin, chair of the Senate Committee on Economic Development, said he has already seen improved clarity.
“I really did notice a difference between the Feb. 2 and Feb. 5 email (from the department of labor) in terms of intelligibility,” said Sirotkin. “It was put forth very simply.”
Previously, the state senator had said an overreliance on acronyms in the department’s correspondence made it difficult for the public and officials alike to determine what had happened and who was affected.
Since 2014, the IRS has allowed payers to truncate Social Security numbers on several tax forms, including the 1099, to protect the payee’s identity. Harrington said the department would consider a similar option.
“I’d have to do some more research and make sure that that is allowable under the unemployment insurance program, which is federally regulated,” he said. “I don’t think anybody is opposed to putting in actions that increase identity protection.”
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