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The Resource Center Credit Fraud & Credit Monitoring The Resource Center | article

TurboTax Temporarily Suspends All Electronic Filings Amidst Identity Theft Attempts

Keep your Social Security number safe to reduce your risk of tax fraud.

Keep your Social Security number safe to reduce your risk of tax fraud.

TurboTax, the largest online tax-software company in the United States, paused all electronic filings after over 19 states detected attempts to obtain fraudulent refunds. The shutdown lasted for 24 hours as company officials worked to bolster security surrounding the online technology. Last year, TurboTax e-filed 21 million state tax returns.

According to tax officials in Utah, more than 19 states have reported misuse of the TurboTax system and possible fraud attempts. In Alabama, the company has halted the processing of as many as 16,000 tax returns that looked suspicious to government officials. TurboTax in Minnesota has also stopped accepting individual returns filed, but is still processing forms submitted by professional tax preparers using Intuit products. Massachusetts and Vermont also took a tax break to ensure that refunds were sent to the correct and legal recipients.

Intuit, the largest seller of tax-preparation software in the U.S., is reporting that its software has not been hacked or compromised in any way, and that the fraudsters are gaining personal information through other means.

“The information used to file fraudulent returns was obtained from other sources outside the tax preparation process,” reported the company, based on a security analysis conducted by Palantir Technologies.

It doesn’t appear that TurboTax software was hacked, and officials are guessing that identity thieves obtained real names and then proceeded to guess the corresponding TurboTax password. This is why it’s vital to make sure your passwords are highly secure.

To do this, only use one password for each account, create passwords that are more than eight characters long and contain a mixture of uppercase and lowercase letters, numbers and symbols. Refrain from using personal information such as your pet’s name or your favorite hobby as the basis of your password. Instead, randomize your passwords as much as possible so a potential criminal will have a more difficult time guessing it. If you are worried about remembering these complicated passwords, try downloading a password safe, which can keep your passwords accessible to you but secure from cyber-criminals.

It’s also important to ensure that your Social Security number remains private. Don’t give out the number unless absolutely necessary, and always check the security measures of places that require it.

Charlie Roberts, a spokesman for the Utah State Tax Commission, told The Wall Street Journal that many of the fraudulent filings they’ve been seeing are created based on a real Social Security number surrounded by fraudulent information. Thieves who gain access to your Social Security number can pad the document with false information. Many of these fake refunds are detected, but some inevitably slip through the cracks, which is why it’s so important to keep your Social Security number as close to your chest as possible. Don’t carry your card around, since thieves might succeed in taking your wallet, and don’t tell friends or family members what your number is.

H&R Block reported that its organization hasn’t experienced any problems related to tax-fraud, and Intuit reports that it is enabling multifactor authentication to make fraud more difficult to perpetrate.