TurboTax stops processing state tax returns on fraud reports - KCTV5

TurboTax stops processing state tax returns on fraud reports

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TurboTax, the country's most popular do-it-yourself tax preparation software, said Friday that it has temporarily stopped processing state tax returns because of an increase in fraudulent filings.

State agencies have reported a rise in filings with stolen personal information, said Intuit, the company behind TurboTax.

Most victims found out that a fraudulent tax return was submitted in their name when they received a rejection notice after filing their returns, said Intuit spokeswoman Julie Miller.

There haven't been issues with federal returns to date because the Internal Revenue Service has implemented stronger fraud detection policies, Miller said.

Intuit is working with security company Palantir to investigate the problem. So far, there has been no security breach of its systems, the company said. Instead, it believes personal information was stolen elsewhere and used to file returns on TurboTax.

Miller linked the problem to recent security breaches at large companies. Just this week, Blue Cross Blue Shield insurer Anthem Inc. said hackers gained access to the Social Security numbers, names, addresses and other personal information of about 80 million people. It follows other security breaches at JPMorgan Chase and several retailers, including Home Depot and Target.

"You have a pretty rich pool of data out there in the world," said Miller.

Intuit said state tax returns already filed when the halt began on Thursday will be transmitted as soon as possible. Consumers can still use TurboTax, and the company will file the state tax returns when the halt is lifted. The company expects to start processing state returns again on Friday with increased fraud protections, said Miller.

TurboTax processed 30 million tax returns last year, Miller said.

Rival H&R Block Inc., which also sells tax preparation software, did not respond to a request for comment.

Another tax preparer, Liberty Tax Inc., said it is letting TurboTax customers to file state returns for free at its more than 4,000 locations around the country.

KCTV5 talked to a tax attorney who says people should go ahead and file their taxes this weekend if that was their plan. He said filing sooner rather than later is better when it comes to tax fraud. 

"It's only the second return that is denied and the refund isn't processed fore that second return. so if you are in essence able to beat the hacker to file the return when you get your W2s, 1099, you could be ahead of the game in doing so," said Ryan White of Evans and Mullinix.

The Missouri Attorney General's Office released a statement on local victims, saying "We have not received any complaints yet, but we would invite consumers to contact us if they have them."

Missouri Department of Revenue added that they are "aware of the situation involving TurboTax and will continue to monitor it. The Department works diligently to safeguard taxpayer information. The Missouri Department of Revenue computer system has not been compromised. Anyone who believes they may be a victim, is encouraged to call Intuit, the developer of TurboTax, at 800-944-8596."

The Kansas Attorney General's Office also released a statement:

"Our office is aware of the situation and has received one specific complaint regarding Intuit's Turbo Tax to date. We have received additional complaints through our consumer protection division about potential tax filing fraud not related to Intuit or Turbo Tax. When a complaint like this is received, we work with the IRS to ensure the payment in question gets blocked immediately and that the consumer is allowed to file the correct return and receive proper payment."

H&R Block also addressed the news:

"H&R Block is aware of the situation concerning potentially fraudulent state tax returns e-filed through software programs provided by at least one other company. We have no indication this issue exists with H&R Block online state returns. H&R Block continues to file state and federal returns as usual."

"H&R Block has sophisticated monitoring and quality assurance methods in place. Importantly, our procedures require an accepted e-filed federal return prior to transmitting a state e-filed return. This is one of our many controls to help prevent fraud."

"Again, we are open for business and our customers can continue to file both their federal and state tax returns."

Shares of Intuit Inc., based in Mountain View, California, fell $3.41, or 3.7 percent, to $88.30 in afternoon trading Friday.

The Federal Bureau of Investigation has addressed the issue of tax refund fraud.

The IRS also addresses how they combat identity theft and refund fraud.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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