Saturday 2/7 - Update- Turbo Tax Has restarted electronic filing of state returns. Security firm Palantir does not believe that there is a security breach in Intuit's system but the fraudulent returns were done outside the system.
The problem was first brought to the general public’s attention when the State of Minnesota stopped accepting returns filed with Turbo Tax on February 5th. Taxpayers were logging into their Turbo Tax accounts to find a note that a state return had already been filed even when they hadn’t filed that return. Minnesota is looking at about 2000 returns filed with the popular tax software. Since their announcement and based on reports from other states, Turbo Tax decided to temporarily halt filing state returns. Other Intuit tax programs (ProSeries, Lacerte or Intuit Tax Online) are not included in the stoppage.
"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," –Brad Smith Intuit’s president and chief executive in a press release.
This is the second problem Intuit has face for the 2015 filing season. Last month they took a lot of heat with the restructuring of their tax products forcing some taxpayers to buy a more expensive package to get the same forms they used on their 2013 return. Intuit had to provide upgrades and refund some payments.
While this Turbo Tax issue is focused on state tax returns, tax identity theft is a big problem. From 2011 through November 2013 the IRS stopped 14.2 million suspicious returns with $50 billion in fraudulent refunds. And that is just what they were able to catch.