NEW YORK — TurboTax, the country’s most popular do-it-yourself tax preparation software, said Friday it temporarily stopped processing state tax returns because of an increase in fraudulent filings.
The Louisiana Department of Revenue and agencies in other states have reported a rise in filings with stolen personal information, said Intuit, the company behind TurboTax.
Most victims found out that a fraudulent tax return was submitted in their name when they received a rejection notice after filing their returns, said Intuit spokeswoman Julie Miller.
The Louisiana Department of Revenue said to date it has flagged 2,011 returns filed through TurboTax software. The department is taking extra precautions to verify the filings and ensure taxpayers receive their proper refund.
“It is our responsibility to protect the personal information of taxpayers, and we do not take that responsibility lightly” said Tim Barfield, revenue secretary. “To our knowledge, our systems at the Louisiana Department of Revenue have not been compromised, but we want to alert all taxpayers who may have been victimized and had their personal information comprised by TurboTax, so they can take the steps needed to protect themselves.“
There haven’t been issues with federal returns to date because the Internal Revenue Service has implemented stronger fraud detection policies, Miller said.
Intuit is working with security company Palantir to investigate the problem. So far, there has been no security breach of its systems, the company said. Instead, it believes personal information was stolen elsewhere and used to file returns on TurboTax.
Miller linked the problem to recent security breaches at large companies. Just this week, health insurer Anthem Inc. said hackers gained access to the Social Security numbers, names, addresses and other personal information of about 80 million people. It follows other security breaches at JPMorgan Chase and several retailers, including Home Depot and Target.
“You have a pretty rich pool of data out there in the world,” Miller said.
Intuit said state tax returns already filed when the halt began on Thursday will be transmitted as soon as possible. Consumers can still use TurboTax, and the company will file the state tax returns when the halt is lifted. The company expected to start processing state returns again on Friday with increased fraud protections, Miller said.
TurboTax processed 30 million tax returns last year, Miller said.
Taxpayers who have concerns about the security of their personal information provided to TurboTax should contact the company toll-free at (800) 944-8596.
Shares of Intuit Inc., based in Mountain View, California, fell $3.88, or 4.2 percent, to close Friday at $87.83.