State taxpayer data lost in mail

Public and private tax information for about 2,400 individuals and roughly 48,000 businesses around the state is missing, the Minnesota Department of Revenue said Wednesday.

The information was on a data tape in a package that was lost last month after being mailed by the department's Brainerd regional office, revenue officials said.

"This is unacceptable," Minnesota Revenue Commissioner Dan Salomone said. "This is a nightmare for me. It's something every tax commissioner worries about."

He said there is no indication that the package was stolen, but that scenario has not been ruled out. The U.S. Postal Service is conducting an investigation.

"We're treating it right now as if it were stolen," said Adam Behnen, assistant inspector-in-charge at the St. Paul Postal Service office.

The information contained on the tape could easily open the door to identity theft because it contains the individuals' names, their addresses, and Social Security numbers.

As required by state law, the department Wednesday mailed notification letters to the 2,400 individuals affected. The letters should arrive by the end of the week.

The department also said it is notifying the affected businesses, a task that should be done within a week or so.

Revenue officials said it would be difficult to gain access to the data, because the tape is encrypted and requires special software and passwords to use. There's no indication that the data have been used, they said.

"We are very optimistic that the taxpayer information will not be affected," said James Zwilling, a Revenue Department spokesman.

Revenue officials said the department does not have any legal liability if fraud is committed with the lost data. But they said the department will talk to those affected about how to obtain free credit reports and how to monitor accounts for fraudulent activity.

A long delay

On May 16, the package was sent by certified mail from the post office in Baxter, Minn., to St. Paul. Such a delivery normally takes two to three days, but the Postal Service said it wasn't notified by the Revenue Department until June 13 that the package was missing.

Postal officials said the only record of the package is the department's certified mail receipt.

The package contained three tax payment checks, department correspondence and a data tape used to back up the regional office's computers. The information relates to tax audits and outstanding tax cases handled by the Brainerd office.

The Revenue Department is conducting an internal investigation on why it took almost a month to notice that the data were missing. It also is looking into why the package was not sent via courier service, which is standard procedure.

This is the third time in less than a year that the Revenue Department has lost sensitive taxpayer information.

An auditor's laptop was stolen, and a portable hard drive was stolen from the purse of a department employee, said Steve Kraatz, acting chief information officer.

The Revenue Department is working on a system at its Edina office to transmit data via a wireless system, which should make it more secure. That change could take place in the next year, Kraatz said.

"There is a risk in any physical transfer of information," Salomone, said. "We can only minimize the risk." Herón Márquez Estrada • 651-298-1554