TurboTax halts filing state returns over identity theft concerns (updated)

Update: TurboTax resumed filing state returns later yesterday.

Original story:

WSYR-TV reports:

TurboTax has halted filing state returns because of concerns over identity theft.

The company says criminals are stealing personal data and filing fake returns – enabling them to claim tax refunds from the government.

An internal investigation shows the breaches aren’t attributed to a problem with the company’s system, but that criminals are actually finding personal information in other places.

Read more on WSYR-TV.

Intuit, TurboTax’s parent company, issued the following statement today:

Intuit Working With State Governments to Solve Emerging Tax Fraud Problem

MOUNTAIN VIEW, Calif. – Feb. 6, 2015 – Intuit Inc. (Nasdaq: INTU) today announced it is working with state agencies to address growing concerns over state tax fraud. During this tax season, Intuit and some states have seen an increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds.

After working with third-party security expert Palantir on a preliminary examination of recent fraud activities, Intuit believes that these instances of fraud did not result from a security breach of its systems and that the information used to file fraudulent returns was obtained from other sources outside the tax preparation process. The examination is ongoing.

“We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,” said Brad Smith, Intuit president and chief executive officer. “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.”

As it worked with state governments to assess and resolve the recent issues, Intuit took the precautionary step Thursday, Feb. 5, of temporarily pausing its transmission of state e-filing tax returns. Intuit will be working with the states today to begin turning transmissions back on.

Customers who have already filed their state tax returns using Intuit software during this temporary pause will have their returns transmitted as soon as possible. They do not need to take further action at this time. This action does not affect the filing of federal income tax returns, and is limited to those states that require residents to file returns.

To assist any customers who believe they are victims of tax fraud, Intuit has implemented a plan that includes a dedicated toll-free number, 800-944-8596, with direct access to specially trained identity protection agents who will provide comprehensive support and filing assistance. In addition, Intuit will provide identity protection services and free credit monitoring, as well as provide access to all versions of its software or to the assistance of one of Intuit’s credentialed tax experts who will prepare taxes for affected customers at no expense.

“We understand the pain and frustration identity thieves cause taxpayers,” Smith said. “We know how important tax time is and our number-one priority is making sure peoples’ returns are filed timely, accurately, and safely.”

In addition, Intuit will continue to apply the most advanced technologies and techniques on an ongoing basis to prevent and detect any suspicious tax filing activity.

So the tax fraud is not TurboTax’s fault, but the company is offering crediting monitoring and other supports to customers? If they’re right that there’s been no breach of their system, that’s pretty cool of them.

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