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Very inportant informaion regarding turbo tax software


Veteran Expediter
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I just recieved a notice from Accounting Today News regarding using TURBO TAX STATE E-FILING

TurboTax TemporarilyHaltsAllStateE-Filings Amid Fraud Concerns

Commnt Now

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(Author’s notes: Updated to include a statement fromH&R Block HRB-0.73%and from Liberty Tax. Also updated to include additionalstate-specific information and a statement from IRS.)

Up to 18 states are reporting significant upticks infraudulent activity and there may be a common thread: tax preparation software.

Individual State Departments of Revenue are loathe toname names but have been quick to point the finger away from their own systems.

The State of Alabama Department of Revenue released astatement yesterday about fraud concerns, saying only, “The fraudulent filingsoriginate from data compromised through a third-party commercial taxpreparation software process and were detected through ADOR’s fraud detectionsystems.” They were quick to assure taxpayers, however, that “our systems havenot been compromised.” Just two weeks into tax season, however, the number ofsuspicious returns in the state has already hit 16,000, all of which were“filed suspected of fraud from the third-party commercial tax preparationsoftware.”

Similarly, the State of Utah has issued a warning (downloads as a pdf) about fraudulentreturns, saying, “The fraudulent filings originate from data compromisedthrough a third-party commercial tax preparation software process and weredetected through the Tax Commission’s fraud detection systems.” Utah also attemptedto quiet taxpayers fears, saying, “All information in the State’s tax computersystem remains secure and has not been compromised.” Utah did not callany particular provider out as solely responsible but did offer that the TaxCommission “was also notified by some taxpayers as they tried to file theirreturns through Intuit INTU-4.28%/TurboTax, that they received a message that their return hadalready been filed.” Utah has pegged the number of potentially affected returns at 8,000.

That’s the same error reported in a number of states. So far, only theMinnesota Department of Revenue has stoppedaccepting tax returns submittedusing Intuit’s TurboTax software. Minnesota has notindicated how many taxpayers might be affected.

Following up on taxpayer concerns, Intuit announced that it is working withstate agencies to address the problem. Intuit reached out to Palantir, a thirdparty security expert, to make a preliminary investigation of the most recentfraud activities. The initial findings have led Intuit to believe that theseinstances of fraud did not result from a security breach of its systems.Instead, the company believes that the information used to file fraudulentreturns was obtained from other sources outside the tax preparation process.

Intuit stressed that they are continuing to investigate.“We understand the role we play in this important industry issue andcontinuously monitor our systems in search of suspicious activity,” said BradSmith, Intuit president and chief executive officer. “We’ve identified specificpatterns of behavior where fraud is more likely to occur. We’re working withthe states to share that information and remedy the situation quickly. We willcontinue to engage them on an ongoing basis in an effort to stop fraud beforeit gets started.”

So what’s next? As ofyesterday, Thursday, February 5, Intuit is temporarily pausing transmission ofstate e-filing tax returns. This is effective for all states. Intuit will be working with the statestoday to begin turning transmissions back on.

If you have already filed your state tax return using Intuit software duringthis temporary pause, you’ll just have to wait it out: taxpayers will havetheir returns transmitted as soon as possible. There’s nothing that you can dojust yet. Trying to file again will just cause you more delays down the road.

Intuit stressed that this action does not affect thefiling of federal income tax returns. It also clearly does not affect taxpayerswho are not e-filing state tax returns.

So far, there has been no indication that federal returns have been affected.That information was confirmed by Julie Miller, spokesperson for Intuit earliertoday. IRS later released the following statement addressing fraud-relatedconcerns:

The IRS has a long tradition of working closely with the softwareindustry and state tax administrators to combat refund fraud. We remain inclose contact with these groups.

Preventing and detecting identity theft and refundfraud remains a top priority for the IRS. We haveadded and strengthened protections in our systems this filing season, and wecontinue to make important progress in stopping identity theft and otherfraudulent refunds.

The IRS continues to accept and process tax returns and refunds, and thefiling season has started successfully. Through Jan. 31, the IRS had acceptedmore than 14 million returns and issued 7.6 million refunds.

Taxpayers should continue to file their tax returns asthey normally would.

In the meantime, to assistany customers who believe they are victims of tax fraud, Intuit has a dedicatedtoll-free number, 1.800.944.8596, with direct access to specially trainedidentity protection agents who will provide comprehensive support and filingassistance. You might note that’s the same number that Minnesota hasprovided to taxpayers. It is not a state-specific number. It isavailable to all potentially affected taxpayers.

In addition, Intuit will provide identity protectionservices and free credit monitoring, as well as provide access to all versionsof its software or to the assistance of one of Intuit’s credentialed taxexperts who will prepare taxes for affected customers at no expense.

It’s important to note that as of now, this issue isonly being reported by taxpayers using TurboTax. For everybody else, it’sbusiness as usual. I reached out to H&R Block, the nation’s #2 tax softwarecompany, and they offered this statement:

H&R Block is aware of the situation concerningpotentially fraudulent state tax returns e-filed through software programsprovided by at least one other company. We have no indication this issueexists with H&R Block online state returns. H&R Block continuesto file state and federal returns as usual.

H&R Block has sophisticated monitoring and qualityassurance methods in place. Importantly, our procedures require anaccepted e-filed federal return prior to transmitting a state e-filedreturn. This is one of our many controls to help prevent fraud.

Again, we are open for business and our customers cancontinue to file both their federal and state tax returns.

Liberty Tax has also issueda statement, announcing that it will offer free state taxreturn preparation in participating offices throughout the United States to any TurboTax customer unable to file his or her state returnusing TurboTax online software. Taxpayers can go to tofind the office nearest them.

As of this afternoon (Friday, 2/6), states confirming anuptick in fraudulent activity include Minnesota, Alabama and Utah, as notedabove. Also confirming increased levels of fraud are South Carolina and New York; the latter reported a “small number of returns” which appear tobe part of this scheme.

States that have confirmed that there are no changes orproblems with fraudulent activity include California, Florida, Indiana, Iowa, North Carolina, and Tennessee.

Additional updates will follow.

How can taxpayers protect themselves? Be diligent. Someexperts suggest changing online passwords for any accounts linked to software(including but not limited to bank accounts and email). If you have questionsor suspect that you might be a victim of fraud, contact your provider andnotify your state’s tax department.

Franklln Katz, ATP, PA, PB

Frank’s Tax and Business Service

315 E. King St.

Kings Mountain, NC28086-3151
(704) 739-4039

Fax: (704) 739-3934
Web Site: Http://

Providing Professional Accounting, Bookkeeping,Payroll and Income Tax Preparation Services

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