TurboTax and Tax Fraud In The News

February 18, 2015

We are only few weeks into tax season and, already, there are more tax fraud stories to report. Although the details remain cloudy, it seems that TurboTax had a security breach a few weeks back, causing the FBI to launch an investigation. Intuit insists that data was stolen from its TurboTax software system by groups on the outside, comparing it to other large company breaches that have recently been in the news. Whatever the cause, the IRS is taking it seriously just as they have other “questionable refund investigations” and identity theft issues that have cropped up in the last few years.

According to a report in the Wall Street Journal, some very personal information was stolen from Intuit’s TurboTax software system and quickly filed in the form of fraudulent state tax returns. Although the entire system was shut down as soon as the data breach was discovered, it reopened shortly and has been working ever since. Intuit has issued a report saying that they are actively working with individual state revenue departments and the IRS to carefully watch and monitor the situation. It has also been reported that all states are working together to spot any potentially fraudulent tax returns even though it is currently unclear as to which states were directly involved in the initial security break.

The IRS stated last week that “preventing and detecting identity theft and refund fraud remains a top priority.” They maintain that they have strengthened the security protection in their filing systems and “continue to make important progress in stopping identity theft and other fraudulent refunds.” In spite of these steps, it seems that each year the criminals come up with various new techniques to steal the identity of innocent taxpayers. Over $1.86 billion in fraudulent refunds were claimed during the 2013 tax season with over 220,821 tax returns deemed fraudulent well before that year’s tax season even ended.In light of such alarming statistics, it is very important that each individual keep track of their own credit to ensure that their identity has not been stolen. It is important to know that identity theft can occur on many levels, from a stolen driver’s license to a major security breach. If you fear you are victim of identity theft or tax refund fraud, the IRS has provided information on how to handle these serious situations on their website: http://www.irs.gov/Individuals/How-Do-You-Report-Suspected-Tax-Fraud-Activity%3F.

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