Intuit halts all its state e-filings because of fraud concerns

TurboTax Stops State Returns
FILE - In this Jan. 24, 2013 file photo, a customer looks at a copy of TurboTax on sale at Costco in Mountain View, Calif. TurboTax says it has temporarily stopped processing state tax returns due to an increase in fraudulent fillings. Intuit, the company behind the popular tax preparation software, says state tax returns already filed since Thursday, Feb. 5, 2015, will be transmitted as soon as possible. Users can still submit their federal income tax returns.(AP Photo/Paul Sakuma)
Photograph by Paul Sakuma — AP

(Reuters) – Intuit (INTU), the developer of tax-preparation software TurboTax, halted e-filing of state tax returns after it noticed attempts to use stolen identity information to file fraudulent returns and claim refunds.

“We’ve identified specific patterns of behavior where fraud is more likely to occur,” Chief Executive Brad Smith said in a statement. “We’re working with the states to share that information and remedy the situation quickly.”

Intuit said fraudulent activity was not due to a security breach of its systems and that the information used to file fraudulent returns was obtained from outside sources.

The company said it turned off the e-filing of state tax returns on Thursday and will restart it after working with state governments.

Minnesota’s revenue department said on Friday it had stopped accepting tax returns submitted using TurboTax, but would continue to accept those filed through Intuit’s professional tax preparation products such as Lacerte, Intuit Tax Online and ProSeries.

The department said some taxpayers found that a return had already been filed when they logged in to submit their returns using TurboTax.

“There has not been a breach of Department of Revenue systems,” the department said in a statement on its website.

Intuit said the halt is limited to those states that require residents to file returns and does not affect filing of federal tax returns.

Customers who have already submitted their state tax returns using the software will have their returns filed “as soon as possible,” the company said.

Intuit’s shares were down 3.6 percent at $88.36 in late afternoon trading on the Nasdaq.

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