NEW YORK — TThe popular TurboTax software has temporarily stopped processing state tax refund filings in all states after reports of fraud increased.
Criminals may be using identity information (like a Social Security number) that was stolen from somewhere else to file fake returns via TurboTax and collect refunds.
In Minnesota, for example, some taxpayers recently logged into TurboTax and saw that a return has already been filed under their name.
Intuit, the company that owns TurboTax, said that itself has not been breached, but an investigation is ongoing. About 29 million people used TurboTax to file their tax returns last year.
Intuit heard from a “small handful of states” that saw an uptick in suspicious filings, said Julie Miller, a spokeswoman from Intuit.
Miller declined to name the states, but Minnesota stopped accepting returns submitted using TurboTax on Thursday. And both Alabama and Utah said that they have discovered thousands of suspicious filings this year. Nineteen states in total have identified similar problems, according to the Utah Tax Commission.
“Unfortunately, the bad guys have a lot of places to get information,” Miller said.
Just this week, insurance giant Anthem was hit by a massive data breach, where information such as names, birthdays, medical IDs, social security numbers, street addresses, e-mail addresses and employment information may have been stolen.
TurboTax did not stop processing federal tax refund filings, said Miller. Those forms have more stringent fraud controls, put in place by the IRS over the past.
Despite the suspension, people can keep preparing their state returns via TurboTax.
Intuit stopped processing electronic state returns Thursday afternoon and said it will store them securely until it can resume doing so.
It was unclear Friday if the problems are more likely to happen when using the free version of TurboTax, Miller said.
H&R Block, another tax preparer, said Friday that it is not having similar problems with state returns.
Intuit customers who believe they are victims of tax fraud can call 800-944-8596 for help. TurboTax said it will prepare taxes for affected customers for free, and provide identity protection services and free credit monitoring.
