Vermont鈥檚 Tax Department has put a temporary hold on issuing income tax refunds to taxpayers who have already filed returns because of suspicious activity with a third-party tax filing program.
Returns sent electronically to the Tax Department through TurboTax, filing software made by Intuit, have had an unusually high amount of alerts, Gov. Peter Shumlin said Friday. As a result, the state decided to halt issuing returns on Wednesday night, he said.
鈥淭his is the new, 鈥楬ow do you rob a bank?鈥� It kind of used to be Bonnie and Clyde, now you figure out a way to exploit a technology, TurboTax, to get somebody else鈥檚 refund. This is not just a Vermont problem, it鈥檚 happening nationally and the IRS is all over this,鈥� Shumlin said in an interview.
Intuit said Friday it is working with states that have seen 鈥渁n increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds.鈥� Intuit stopped transmission of electronic tax returns to states on Thursday.
The company said it is working with a third-party security firm on a preliminary investigation of recent fraud activities. So far, instances of fraud do not appear to be the result of a security breach of its systems. Rather, the information used to file fraudulent returns was obtained from other sources outside the tax preparation process, according to the company. The investigation is ongoing, however.
"We've identified specific patterns of behavior where fraud is more likely to occur." - Brad Smith, Intuit
鈥淲e understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,鈥� Brad Smith, Intuit president and chief executive officer, said in a statement. 鈥淲e鈥檝e identified specific patterns of behavior where fraud is more likely to occur. We鈥檙e working with the states to share that information and remedy the situation quickly. We will continue to engage them on an ongoing basis in an effort to stop fraud before it gets started.鈥�
Shumlin said no state systems have been compromised, but Tax Commissioner Mary Peterson chose to halt refunds until the problem could be solved. Other states have also suspended tax refunds.
鈥淲hat the commissioner has wisely said is, 鈥楲et鈥檚 just put a hold on refunds for a few days and work through these red flags, individual, one-by-one, to make sure that no one鈥檚 ripping off Vermont鈥檚 taxpayers,鈥� the governor said.
Shumlin said the delay in refunds is likely to last a few days.
"What I'm trying to protect Vermonters from is having their money ripped off by people who don't deserve it." - Gov. Peter Shumlin
鈥淲hat I鈥檓 trying to protect Vermonters from is having their money ripped off by people who don鈥檛 deserve it,鈥� he said. 鈥淭his isn鈥檛 going to be a long pause, but we really do want to work through why we鈥檙e getting so many red flags. The other states, I think, are doing the same thing, taking a brief pause on refunds so we can get to the bottom of this.鈥�
Intuit has set up a toll-free number for customers who believe they could be victims of fraud. The number will provide direct access to specially trained agents who can assist. The company is also providing identify protection services and free credit monitoring.
鈥淲e understand the pain and frustration identity thieves cause taxpayers,鈥� Smith said. 鈥淲e know how important tax time is and our number-one priority is making sure peoples鈥� returns are filed timely, accurately, and safely.鈥�
This story was originally published by the and reprinted under a partnership with the bureau.
