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TurboTax resumes state filings that had been on hold
H&R Block, TaxACT say business as usual for their filers

After being in limbo for about a day, TurboTax this afternoon resumed its state e-filing services.

TurboTax Deluxe boxTurboTax, the popular tax preparation program produced by Intuit, had suspended e-filing of state returns because of tax fraud concerns across the nation. The hold was in place for around 24 hours.

The decision came after several states, including Minnesota, Utah and Alabama, reported an increase in suspicious filings and tax refund fraud attempts using stolen taxpayer information.

Minnesota Department of Revenue officials took things up a notch on Thursday, refusing to accept state returns completed via the software. The state had heard from two TurboTax customers whose legitimate filing attempts were rejected because the state already had received returns in their names.

Intuit then opted to halt not only Minnesota, but all state e-filings while the matter was under investigation.

Just a day off: During the almost 24 hours that the TurboTax prepared state returns were on hold, the company worked with states that had raised concerns.

"Nothing is more important to us than the safety of our customers' data," said Brad Smith, Intuit president and chief executive officer in a statement on the TurboTax blog. "We are taking this issue very seriously and from the moment it emerged it has been all-hands-on-deck. We’ll continue to remain vigilant, but I am more than pleased that we were able to resume transmission for our customers within about 24 hours."

No security breach: Although the suspected fraudulent returns are believed to be based on taxpayer data acquired from sources "outside the tax preparation process" and not due to a security breach of Intuit or TurboTax systems, the company decided it was better to be safe rather than sorry.

"We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity," said Smith in a statement announcing the temporary halt of state e-filing. "We've identified specific patterns of behavior where fraud is more likely to occur. We're 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."

This is not the first time that TurboTax has had tax troubles in the Land of 10,000 Lakes. In 2013, state tax officials told Minnesotans not to use Intuit products to file state taxes because of multiple issues with the state software that year. The issues were cleared up within a couple of weeks.

Fraud follow-up: TurboTax customers who believe they are victims of tax fraud can call (800) 944-8596 to speak with identity protection agents who will provide support and filing assistance.

Intuit also is offering identity protection services and free credit monitoring to customers who are or suspect they might be tax fraud victims.

And if you only used TurboTax to file a federal tax return, you don't have to worry about that. This electronic filing pause affects only state returns.

H&R Block OK: You also don't have to worry if you used a competing tax preparation software.

Spokespeople for both H&R Block and TaxACT say that while their companies are aware of the issues with TurboTax filings, it's business as usual for their state customers.

"We have no indication this issue exists with H&R Block online state returns. H&R Block continues to file state and federal returns as usual," said the Kansas City, Missouri-based company in an emailed statement.

"H&R Block has sophisticated monitoring and quality assurance methods in place. Importantly, our procedures require an accepted e-filed federal return prior to transmitting a state e-filed return. This is one of our many controls to help prevent fraud," continued H&R Block statement. "Again, we are open for business and our customers can continue to file both their federal and state tax returns."

TaxACT fine, too: It was essentially the same message for TaxACT users.

"We are not seeing similar activity in our proactive monitoring, and we will continue to partner with state agencies and the IRS to prevent fraud," said the Cedar Rapids, Iowa-based TaxACT, also in an emailed statement.

"Taxpayers can file state and federal returns as usual with TaxACT," continued the statement. "As always, we advise customers to use strong passwords and check email for confirmation of account activity. If you suspect you may be a victim of fraud, please contact TaxACT and your state agency immediately."

NOTE: This post's original content was updated at 6:25 p.m. CDT to reflect the resumption of TurboTax state tax return e-flings.

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