The Vermont Tax Department says it has temporarily stopped issuing personal income tax refunds while it makes sure that tax refund fraud isn't occurring in the state.
The Tax Department says the potential identity theft and refund fraud is not related to any breach of Vermont government systems, but rather the use of identities stolen elsewhere.
It says it is talking with other states and tax preparation software vendors and will issue an update soon on when refunds will resume.
Refund fraud occurs when thieves file bogus tax returns using stolen identities, including Social Security numbers.
To combat the problem, the Tax Department says this year it's issuing only paper checks to first-time filers, since fraudulent refunds are often associated with first-time returns.