Tax fraud is a growing problem for the IRS and state tax officials, which are tasked with keeping up with the sophistication of online tax criminals. A surge in suspicious filings this year caused TurboTax, which is owned by Intuit, to temporarily halt the submission of state tax returns. The incident also raised questions about how much tax software providers like TurboTax should do to prevent fraud.
Intuit’s screening systems annually identify millions of returns as “suspicious,” internal documents obtained by The Post show. But the company has said it is up to the IRS to determine whether a tax return is fraudulent and reject it. “We do not have that authority,” the company said in a statement.
The company is calling for industry-wide standards outlining how much tax preparation companies can do to halt fraud. “We called for this summit and are pleased that industry and government are working together to fight fraud,” Intuit spokeswoman Julie Miller said.
In addition to Bill Cobb, the chief executive of H&R Block, and Brad Smith, the chief executive of Intuit, Jackson Hewitt Tax Service says president and chief executive David Prokupek will also be at the meeting.
Tax fraud is getting the attention of Congress, the Justice Department and the FBI. The Senate Finance Committee held a hearing on fraud last week, where state tax authorities and federal investigators proposed some solutions for slowing tax fraud, including stronger security measures from online tax preparation companies and a shorter time period between when taxpayers can file returns and when the IRS receives the income information it needs to verify returns.
State tax officials also called for a procedure that makes it easier to know when refunds are being deposited on prepaid debit cards, which they said was the vehicle of choice for identity thieves stealing refunds. They also called for added security when people opt to pay their filing fees from refunds because fraudsters doing that are essentially passing the cost of those fees on to taxpayers.
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