Hacked SC Tax Agency Launches More Secure Computer System

The South Carolina agency that got hacked in 2012, resulting in the theft of the personal information of 6.4 million state taxpayers, their dependents, and businesses, has launched a new, more secure computer system. The state Department of Revenue’s new “MyDORWAY” is being used only for businesses’ sales tax and withholding right now, but will expand over the next three years to include corporate taxes and your individual income taxes.

DOR Director Rick Reams says the new computer system is not a direct result of the hacking.

“This needed to be done anyway,” he says. “The hacking may have prompted the agency to push forward quicker than otherwise it would have. But what happened is that, for many years, the Department of Revenue was developing its own in-house tax processing system. That project failed miserably. It was always over budget. It was always behind schedule, and every time it got to a stopping point it was outdated and no longer supported by the vendors who built the hardware behind the product. And so when I was appointed, we made a decision to pull the plug on that failed development and purchase an off-the-shelf system that is a proven success in 18 other states, that was developed by the private market, and it’s implemented by the vendor with our support.”

While the new system was not prompted by the hacking, he says it is more secure. “This system is new, and it was developed with security inherent in it, whereas the old legacy systems were developed at a time when hacking was not as widespread as it is now,” he says. “And so what many agencies have tried to do is layer security on top of those old, aging systems. It has not worked as well as it should. And so we made the decision to purchase a brand new, off-the-shelf system with security inherent in it.”

While the system is new, faster and more efficient, some business owners have complained about how long it’s taking them to get set up on it. They have to re-enter all of their old information that was in the previous tax system. Why couldn’t the department just pull over all the old information it already had about businesses?

“Starting fresh enables us to start with cleaner, better data and it also enables us to start with security at the forefront of everything that we’re doing,” Reames says. And he says since the new system is completely different from the old one, it was not possible to bring over all of the old information.

He says the new system will cost taxpayers about $29 million over four years, but will save taxpayers about $40 million over the next decade by not having to support aging software and hardware.

The timeline for the new system launching for other taxes is: corporate income tax in the fall of 2016; individual income tax in the fall of 2017; and all other taxes in 2018.

The DOR has online tutorials available to help business people learn the new system, and also has phone support. When it launches the system for individual income taxes in two years, Reames says there will be a lot of taxpayer awareness and education promotions to get people up to speed.

You can see the new system here.

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