TurboTax Fraud May Impact Federal Returns Too, FBI Investigating

Tax filing season arrived with a bang this year, punctuated by a big uptick in fears about fraud. There was nearly a bank run when TurboTax had to suspend filing state tax returns over fraud concerns. It would be bad enough to find that someone had filed 'your' tax return in your state and scooped up your refund. But all indications were that this was just a state tax problem, not a federal one. Not any more. Although details are sketchy, the FBI is now investigating fraudulent tax returns filed through TurboTax. Some taxpayers claim that their federal refund may be in jeopardy. Taxpayers interviewed about the fraudulent tax filings said their IRS data was compromised too and returns were filed, perhaps based on their 2013 tax return data. Imagine getting a congratulatory email from TurboTax that your federal return is on file when you haven't yet filed! Given that virtually everything is electronic these days, that has become a massive issue. TurboTax is one of the most popular individual return preparation programs, but the impact of this kind of mess is significant. During the state return flap, H&R Block was able to one-up its TurboTax rival by stating that it was not impacted by all of this. When TurboTax got back in the saddle and resumed the processing of state tax returns, it said it added security.