TurboTax resumes state e-tax filing; MN still not accepting returns

A Costco shopper purchases TurboTax on March 5, 2008.
Paul Sakuma / AP 2008

Updated 6:45 p.m. | Posted 11:11 a.m.

After temporarily stopping state electronic filing of TurboTax returns as a "precautionary step," Intuit resumed the filings late Friday afternoon. The company says it has added security features to fight fraud.

The Minnesota Department of Revenue on Thursday said it stopped taking tax returns filed with TurboTax because of concerns over potential fraud.

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The department has not said if it will resume accepting the returns now that TurboTax has added new security features.

Revenue Commissioner Cynthia Bauerly said late Thursday her office heard from two taxpayers who found returns had already been filed in their names through TurboTax.

"We have identified what we think could be potentially fraudulent activity," Bauerly said, "and so we have taken steps to protect Minnesota systems and taxpayers by not accepting TurboTax-filed returns at this time."

The department is now reviewing 2,000 returns and wants Intuit to identify the source of the problem and fix it, then advice customers what to do, said Assistant Revenue Commissioner Terri Steenblock, who oversees individual returns for the department.

"As soon as Intuit has sufficiently met the requirements and shared with us the information we're asking for, we'll look at accepting TurboTax returns," Steenblock said.

The department says no problems have been detected with the TurboTax software for professional tax preparers.

Professional tax preparers say that in order to avoid the filing of fraudulent tax returns people need to keep a close eye on tax documents. St. Cloud CPA Joseph Maiers says any taxpayer who doesn't have W-2s and other tax documents in hand by now should figure out their whereabouts.

"Call your employer and ask if they've been mailed out," Maiers said. "If it's been sent a week ago and hasn't been returned, then I would contact the IRS."

Maiers says the IRS can issue taxpayers a security code without which a return won't be accepted.

In its statement Friday, TurboTax said some states have seen an increase in suspicious filings and "attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds."

The company says it doesn't believe hackers breached its security.

Instead, it believes the "information used to file fraudulent returns was obtained from other sources outside the tax preparation process."

This isn't the first time the state has had problems with returns prepared with Intuit tax software. In 2013, the Revenue Department found about a dozen errors in the software, ranging from a miscalculation of the credit for married couples to an error in figuring property tax refunds. That affected about 14,000 tax returns before the software code was fixed.