TurboTax, the country’s most popular do-it-yourself tax preparation software, halted processing state tax returns for about 24 hours because of a spike in fraudulent filings.
Intuit, the company behind TurboTax, said it resumed the filing of state returns about 5 p.m. Central time Friday with increased anti-fraud measures, a day after halting the process when state agencies reported a rise in filings with stolen personal information.
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.
Never miss a local story.
Intuit is working with security company Palantir to investigate the problem.
So far, there has been no security breach of Intuit’s systems, the company said. Instead, it believes personal information was stolen elsewhere and used to file returns on TurboTax.
Rival H&R Block, which has the No. 2 tax preparation software programs, said in an emailed statement Friday that it was unaware of any problems with its customers’ state tax filings and had taken no action to limit filing by its customers.
Block said its monitoring and quality assurance efforts included the requirement of an accepted e-filed federal return before transmitting a state e-filed return.
At TurboTax, Miller linked the problem to recent security breaches at large companies. Just this week, Blue Cross Blue Shield insurer Anthem 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 Thursday will be transmitted as soon as possible.
TurboTax processed 30 million tax returns last year, Miller said.
Another tax preparer, Liberty Tax, said it is letting TurboTax customers file state returns for free at its more than 4,000 locations around the country. Jackson Hewitt Tax Service also said TurboTax customers who were unable to file their state returns could file for free through its online service.
Shares of Intuit, based in Mountain View, Calif., fell $3.88, or 4.2 percent, to $87.83 Friday.