Last Friday around 6pm, TurboTax resumed state filing after a day of pausing the process as a number of fraud filings were sent through the service. Identify thief's are using the popular tax software to file fake state returns for individuals who’s information has been stolen.  The refunds are cashed by the thieves without the affected government agency or the individual knowing there was an issue. CEO of Intuit, Brad Smith, reported that his company attacked the issue and felt comfortable moving forward within the 24 hour period.

The personal information was not stolen from Intuit but was procured elsewhere. Filers that had their state returns paused do not need to do anything, TurboTax will process them as soon as possible. TurboTax had to react quickly as Minnesota stopped accepting state returns from the company when issues appeared. H&R Block is not experiencing the same type of state return fraud that is impacting its competitor. They will not allow a state return to be filed unless a federal return was filed first.

According to security experts, you can purchase personal tax information online in bulk at reasonable prices. In the past, Federal returns were the target of fraud from identity theft. Focusing on state returns is something unique to 2014. In 2013, the federal government paid $5.2 billion in fraudulent tax refunds. Really! Individuals don’t discover there is an issue until they attempt to file and are notified that their return has already been filed.