(Bloomberg) Intuit Inc. Chief Executive Officer Brad Smith wrote to the Internal Revenue Service calling for the government to share information to help combat fraud, after states saw a rise in fraudulent returns being submitted via his company’s TurboTax tax software.
The letter, sent Monday to IRS Commissioner John Koskinen, urges the agency to take immediate action to combat growing tax refund fraud. It’s a move by Mountain View, California-based Intuit to contain fallout after a breach in content led to an increase in attempts to use stolen information for fake returns.
“We’ve been able to run diagnostics on our systems and we have come to the conclusion this was not a breach of our system,” Brad Smith said in an interview with Bloomberg. The company’s current hypothesis is that the fraudulent returns were filed by people using data which had been obtained elsewhere, he said.
Federal investigators are now examining whether the breach led to the filing of false state and federal income tax returns, said a person familiar with the matter. In particular, the Federal Bureau of Investigation is investigating how records were obtained from TurboTax and used to file fraudulent tax returns, said the person, who asked not to be identified because the probe isn’t public. The probe is still in its early stages, the person said.
“Intuit has not been notified, nor are we aware, that we are the target of an FBI investigation,” said Julie Miller, a spokeswoman for Intuit, who said the company is working with private sector security experts to examine recent fraud activities.
“Intuit believes that these instances of fraud did not result from a security breach of its systems,” she said.
Intuit temporarily suspended filing of state tax returns Feb. 6 after seeing a rise in suspicious filings and attempts to use stolen information for fake returns. The company said federal tax filing wasn’t affected.
“Recent developments suggest fraudsters are now migrating to the States where anti-fraud efforts may not always be as evolved as those as the Federal level,” Smith wrote in his letter to Koskinen.
Americans are in the middle of their annual tax-filing season ahead of an April 15 deadline. Typically, taxpayers are due refunds on national and state taxes already paid, creating an opportunity for people to file bogus claims or steal identities to claim the cash.
It will be important to know what information was used to file the fraudulent returns, said Gil Luria, a Los Angeles-based technology analyst with Wedbush Securities Inc.
“People are logging into TurboTax and TurboTax is telling them you’ve already filed your taxes—the reaction to that is not going to be good,” said Luria. “It’s really piling on in an already difficult tax season for TurboTax.”
The investigation and CEO letter were reported earlier by The Wall Street Journal.
Last month, Intuit faced a backlash from customers who complained after it tweaked its Deluxe software, forcing people to pay more to get the same features they had used in the past. To make amends the company offered customers that had been forced to upgrade $25 in cash back.
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