COLUMBIA, SC — The number of taxpayers affected by the massive data hacking at the state Department of Revenue has risen by 200,000 to 3.8 million, S.C. officials told The State Tuesday.
Meanwhile, South Carolina was expecting a much larger price tag to help protect consumers in the days just after it revealed to the public that hackers took state tax information dating back to 1998.
On Oct. 28, the state Revenue Department projected it could cost the state as much as $63.2 million to provide taxpayers with a year of credit-fraud monitoring, mail notices, hire contractors and cover call-center costs, according to documents obtained by The State.
That is more than 50 percent more than the Revenue Department’s $41.7 million in total funding from the state this year.
The projection -- emailed from S.C. Revenue director James Etter to the governor’s office two days after the breach became public -- was based on 90 percent of those affected by the hacking incident enrolling for a year of credit monitoring and insurance, the cost of which is to be paid by the state.
The department’s estimate came shortly before the state and credit-reporting firm Experian agreed to a $12 million cap on the fees that it will charge the state.
Etter’s email was released as part of an freedom-of-information request to Gov. Nikki Haley’s office. Nearly 700,000 people have enrolled for free credit monitoring through Tuesday, Experian said.
The upward revision on the number of taxpayers affected by the breach was released after The State inquired about data in the Revenue Department projections. A department spokeswoman said she expects the revised numbers -- 3.8 million consumers and an additional 657,000 businesses affected – to hold up.
The Revenue Department’s projection, issued on Oct. 28, estimated that dealing with the hacking incident would cost nearly $1.6 million to make mailings and hire contractors, including previously undisclosed work by a Columbia public relations firm.
The department hired the Chernoff Newman PR firm to help prepare press packets and buy newspaper and online advertisements providing guidance to consumers and businesses affected by the data theft, officials said. The public relations firm is expected to receive $150,000, according to projections.
The public relations firm also worked with state officials to craft a consistent message and have a solution in place for consumers after the news conference announcing the hacking was held on Oct. 26, Chernoff vice chairman Rick Silver said.
Experian’s phone lines were jammed in the days after the announcement.
“I have confidence that Jim Etter and Department of Revenue are working diligently to take the right steps in this constant battle with an evolving information and technology environment we live in,” Chernoff Newman suggested in a set of talking points to Haley shortly before she first told the news media about the breach.
Haley’s office said the governor did not use Chernoff’s talking points.
The Revenue Department also has hired outside firms to help with legal issues and fix the security hole that allowed an overseas hacker to grab state tax return information dating back to 1998.
The Columbia-based Nelson Mullins law firm negotiated a contract for the state with Experian to provide credit-monitoring for theft victims and examine the state’s liability issues. The law firm’s fees are projected at $100,000.
Revenue officials also hired the Washington, D.C.,-area based information-technology firm Mandiant at the recommendation of the Secret Service, which is leading the investigation into the hacking. The firm found and closed the spot where hackers used state-approved credentials to steal the tax information.
Haley said last week the state had spent $125,000 with Mandiant. However, the Revenue Department expects that bill to reach $500,000, according to its projections.
Mailings to 1.3 million people living out of state who have filed S.C. income taxes since 1998 are projected to cost another $741,000.
Final costs for the contractors will be determined later.
How the Revenue Department will pay for the Experian contract and other costs has not been decided.
The governor’s office and department said they have spoken with legislative leaders about getting additional taxpayer money to pay the expenses. But Senate Finance Chairman Hugh Leatherman, R-Florence, has said the state does not have extra money to spend this year.
