TurboTax Suspends State Tax Filing Over Fraud Concerns

Tax ID theft is reaching epidemic proportions. Well, it did last year when the IRS issued seemingly endless warnings about it. Now, TurboTax announced it has paused state tax return filing for people who use the software after it received complaints of “suspicious filings.” The firm said its own systems weren’t hacked, and that it was working with individual states to turn filing back on.

Intuit, which owns TurboTax, is “working with state agencies to address growing concerns over state tax fraud,” the firm said in a blog post. “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.”

Tax ID theft has turned into a profitable — and fairly easy — crime to commit. Identity thieves simply file a tax return before the rightful holder of a Social Security number and intercept the refund. Victims usually don’t discover the problem until they try to file their taxes and are rejected.

“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,” the firm said. The pause does not impact federal tax returns.

“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.”

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The firm said it would offer identity theft victim and credit monitoring services to customers who are hit by tax fraud.

“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.”

It’s also a good idea to check your credit reports for other possible signs of identity fraud, such as new accounts or collection accounts on old debts that aren’t yours. You can see your free annual credit reports from each of the major credit reporting agencies, and you can also get a free credit report summary updated every 14 days on Credit.com to look for unexpected changes.