"We want to make sure everybody understands that our State will respond with a big, large-scale plan that is somewhat unprecedented to take care of this problem," Haley said.

The state will provide affected taxpayers with a year of credit monitoring and identity theft protection service from Experian.

"Anyone who has filed a South Carolina tax return since 1998 is urged to visit protectmyid.com/scdor or call 1- 866-578-5422 to determine if their information is affected," the Department said.

"While details are still emerging, we can already say that this breach of records at the South Carolina Department of Revenue (SCDOR) is exceptional, both in terms of the large number of records compromised and the potential damage to confidence in state government that may result," Stephen Cobb, a security evangelist at security firm ESET, said via email Friday.

"The cost is also going to be enormous, given that South Carolina may be required to pay for identity theft protection services for anyone who has paid taxes in South Carolina since 1998," he said.