TurboTax turned off the ability of its own software to e-file all state tax returns across the country on Thursday. The company found there was an increase in suspicious filings, said company officials on Friday.
The software maker that specializes in tax preparation software found an increase in criminal activity in which stolen data was used to file fake tax returns for state taxes. This illegal filing allows scammers to claim a tax refund from state tax authorities.
An internal investigation by TurboTax found the breaches were not due to problems with its own software or systems, but it was from criminals digging up personal information from other sources.
The company says that an investigation is ongoing. Inuit said it is working with officials for the state revenue departments to get the filing back to where it should be so it can be turned back on.
Customers who have already e-filed using TurboTax do not have to do a thing. The returns will go through another transmission once the problem has been resolved, said TurboTax.
The stoppage of e-filing only affects tax returns for state and not federal returns. All federal tax returns can be filed electronically.
This is just the most recent headache for the company. Intuit users this year were outraged earlier by a steep hike in prices that forced many investors and people who are self-employed to pay as much as 50% more for their tax preparation software.
Intuit hopes that this controversy will be ended by Saturday when anyone purchasing the least expensive Deluxe version is able to upgrade to the Home & Business or Premier version at no extra cost.
The longer the problem with state tax returns continues the more problems Intuit will have, as taxpayers will find other options for filling their state tax returns.