During the current tax season, Intuit said that the company and some states have noticed an increase in “suspicious filings” and attempts by to use stolen information to file fake state tax returns, and then claim resulting tax refunds.
“We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,” Brad Smith, Intuit president and chief executive, said in the release.
“We’ve identified specific patterns of behavior where fraud is more likely to occur. We’re working with the states to share that information and remedy the situation quickly. We will continue to engage them on an ongoing basis in an effort to stop fraud before it gets started,” he added.
According to Forbes, up to 18 states are reporting significant upticks in fraudulent activity and there may be a common thread: tax preparation software.
Individual State Departments of Revenue are loathe to name names but have been quick to point the finger away from their own systems.
The State of Alabama Department of Revenue released a statement yesterday about fraud concerns, saying only, “The fraudulent filings originate from data compromised through a third-party commercial tax preparation software process and were detected through ADOR’s fraud detection systems.” They were quick to assure taxpayers, however, that “[o]ur systems have not been compromised.” Just two weeks into tax season, however, the number of suspicious returns in the state has already hit 16,000, all of which were “filed suspected of fraud from the third-party commercial tax preparation software.”
Federal e-filing is completely unaffected and has continued on as normal. And some states are still accepting filings from Intuit’s professional-grade software, but if you’re having trouble filing your state return with TurboTax on your phone, now you know why. For those who filed during the pause, there’s nothing else to do; Intuit says it will work to process your return as soon as possible.
No other providers have yet been identified as a source of fraudulent state e-filed returns.
Intuit this year angered some longtime users of its software by quietly making changes to the products that would have required some customers to upgrade to more expensive versions to file 2014 tax returns. Late last month, the company said it would reverse the changes next year—while also shielding customers from, or compensating them for, additional costs incurred this year.