If you are using TurboTax to file your state tax returns, you may not be the only one. Late last week TurboTax stopped electronically filing of all state returns. This came after states reported that there were individuals trying to obtain refunds through their system fraudulently using TurboTax software. The issues were raised when multiple individuals were filing returns under the same Social Security numbers. The source of the problem has so far been reported as not a TurboTax internal security breach. A spokeswoman at Intuit is crediting the issue to weak user passwords that have been hacked when the username or email was known.
Utah, Alabama, Minnesota, and Georgia were the states that issued press releases about the tax fraud. As of last Friday, Minnesota had stopped accepting returns by individuals using TurboTax all together. North Carolina has not released any issues with the system yet and we hope it stays that way. TurboTax may have been targeted for this fraud since state returns can be electronically filed without the Federal return being processed. The use of the Social Security number twice on the Federal side typically catches the fraud and sends up a red flag for states. The prevalence of the fraud can be perpetuated by the ability to file state tax returns across multiple states under one Social Security number. Cases of this theft have shown that the returns often times mimicked 2013 filed tax returns to avoid suspicion.
This incident is yet one more reason to keep your information secure and to file timely. Like we mentioned in a previous blog post we utilize our custom Sharefile site here: www.adamshaycpa.sharefile.com to protect tax return data for our clients. If you are using TurboTax we recommend a reset of your passwords during this tax season to help avoid this happening to you. If you think you may have been a victim of tax fraud there are avenues for recourse as well.