Intuit, the parent company of TurboTax, stopped ease filing transmissions for 24 hours due to fear of fraudulent filings. The company states that it did indeed return filing of state returns the following day with increase protections, with only a concern for the previous 24-hour period.
Intuit claims that a marked increase in attempted filings and suspicious filings by criminals using stolen identities was the cause for its increased security and temporary block. Among the many states that did see an uptick in suspicious activity, Minnesota was among the heaviest. The Minnesota state Department of revenue said it will not be accepting online returns via TurboTax. The department was alerted that several Minnesota taxpayers had notified them that upon logging on into TurboTax to submit their filing they had discovered that a return had already been set. The return was obviously fraudulent and steps were taken to apprehend the criminals involved. This doesn't change the fact that Minnesota does not trust TurboTax.
Intuit publicly stated that after intense investigation into the recent fraud they believe that the information used to file these returns was obtained from "sources outside the tax preparation process". Not surprisingly they also claim that the fraud was not the result of any issues with the TurboTax system and that their company was not breached in any way as a result.
Despite this Intuit has increased its security measures in order to fight this type of fraudulent filing activity. They are now using a proven protective technology referred to as multifactor authentication. This is been used by various companies across many platforms to protect against identity theft. It has proven effective in the past.
The stoppage of E filings in Minnesota did not affect federal income tax returns according to Intuit.
In the 2013 tax filing the IRS estimates that it paid over $5 billion in fraudulent claims tied to identity theft. This is according to the Government accountability office in a report released in 2014. Without my money on the line its clear local state and federal government are going to begin cracking down on anything that would increase identity thieves and their ability to file fraudulent tax returns.