TurboTax Resumes Filing Of State Returns After Suspension Over Fraud Risk

NEW YORK (CBSNewYork/AP) -- TurboTax, the country's most popular do-it-yourself tax preparation software, said Friday that has resumed processing state tax returns, following a temporary suspension because of an increase in fraudulent filings.

E-filing resumed at 6 p.m. Eastern time, TurboTax parent company Intuit Inc. announced in a news release. The company has continued to work with states where suspicious filings have been reported.

State agencies had reported a rise in filings with stolen personal information, Intuit said.

"Nothing is more important to us than the safety of our customers' data," Intuit president and chief executive officer said in a news release Brad Smith. "We are taking this issue very seriously and from the moment it emerged it has been all-hands-on-deck. We'll continue to remain vigilant, but I am more than pleased that we were able to resume transmission for our customers within about 24 hours."

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.

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.

"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."

Miller linked the problem to recent security breaches at large companies. Just this week, Blue Cross Blue Shield 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,'' said Miller.

Intuit said state tax returns already filed when the halt began on Thursday would be transmitted as soon as possible. Consumers were allowed to continue using TurboTax, and the company was to file the state tax returns when the halt was lifted.

Any TurboTax customers who believe they are victims of tax fraud can call (800) 944-8596 to access specially-trained identity protection agents.

TurboTax processed 30 million tax returns last year, Miller said.

Rival H&R Block Inc., which also sells tax preparation software, did not respond to a request for comment.

Another tax preparer, Liberty Tax Inc., said it is letting TurboTax customers to file state returns for free at its more than 4,000 locations around the country.

Shares of Intuit Inc., based in Mountain View, California, fell $3.41, or 3.7 percent, to $88.30 in afternoon trading Friday.

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