Concerns about fraud lead Turbo Tax to temporarily halt state e- - Tri-State News, Weather & Sports

Concerns about fraud lead Turbo Tax to temporarily halt state e-filing

(Source: AP Graphics) (Source: AP Graphics)
(NBC) -

Intuit has halted the transmission of all state e-filing tax returns on worries of rampant fraud, the company said.

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.

Although the company said it did not believe its systems had been compromised, it said it took a "precautionary step" on Thursday by pausing state return e-filings. A spokeswoman from the company said its goal is to resume e-filing in a matter of hours rather than days.

"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.

Intuit said in a statement that it is working with state agencies to address "growing concerns over state tax fraud."

The Indiana Department of Revenue has released this statement, "The department has analyzed existing Indiana returns for potential identity theft and has already put in place measures to protect both the state and its taxpayers from potential fraud and identity theft from this issue. Analysis indicates few if any, fraudulent returns have been accepted in Indiana."

The Kentucky Department of Revenue says it anticipates the temporary halt of processing electronic returns will add just a few days to the refund process. The goal is to return to normal processing late next week.

"We have strong internal controls to protect Kentucky taxpayer data and personal information," said Mack Gillim, executive director of the Office of Processing and Enforcement.

Intuit said it worked with third-party security expert Palantir to determine that the fraud likely did not result from a security breach of Intuit systems, and that the information used to file the false returns was likely "obtained from other sources outside the tax preparation process."

In a Thursday morning press release—apparently published before Intuit halted its state e-filings—Intuit issued an industry call-to-arms against tax fraud.

"People work hard for their money, pay their taxes, and do their best to be in compliance. Yet criminals steal names and identities to wreak havoc with people and the tax system," Smith said in that release. "Private industry and government need to work together to find ways to take billions of fraudulent dollars out of the hands of criminals and put them back in the pockets of American families where it rightfully belongs."

Internal Revenue Service estimates say that that $5 billion is lost every year through tax fraud and improper payments, according to Intuit.

If you have questions about returns already submitted via TurboTax, contact TurboTax at 1-800-944-8596. You can also contact the Indiana Department of Revenue at (317) 232-2240 or the Kentucky Department of Revenue at (502) 564-4581.

(Copyright 2015 NBC, CNBC. WFIE contributed to this report. All rights reserved.)

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