Intuit’s TurboTax, the most popular U.S. tax software, said Friday it stopped processing state tax returns for about 24 hours after detecting fraudulent filings, another sign of the growing problem of tax refund fraud.
State agencies have reported a rise in filings with stolen personal information, Intuit said Friday. The temporary halt did not affect federal income tax filers.
Intuit said it resumed filing of state returns at about 6 p.m. U.S. Eastern time Friday with increased fraud protections, a day after it halted them.
Intuit had detected attempts by cyber criminals to use stolen identity information to file fraudulent state tax returns and claim bogus tax refunds.
Intuit said the fraud did not result from a security breach of its systems, but that the information used to file fraudulent returns was obtained from other sources outside the tax preparation process. But the investigation is ongoing, said Intuit, which is working with third-party security expert Palantir.
Most victimized filers found out that a fraudulent tax return was submitted in their name when they received a rejection notice after filing their returns, Intuit said.
There haven’t been issues with federal returns so far because the Internal Revenue Service has implemented stronger fraud detection policies, an Intuit spokesman said.
While the IRS has made big strides over the past several years to address refund fraud, it remains a top concern for the agency.
“As a result of these aggressive efforts to combat identity theft from 2011 through October 2014, the IRS has stopped 19 million suspicious returns and protected over $63 billion in fraudulent refunds,” the IRS said last month.
For 2015, the IRS said it “will continue to increase both the number and efficiency of the identity theft data models and filters that are used to identify potentially fraudulent returns.”