Last week, TurboTax had to stop filing state tax returns for approximately 24 hours after reports of a flood of fraudulent returns. The Wall Street Journal reports the FBI is considering whether it was the result of a hack, or if it could just be an example of how easy data acquired elsewhere can be used for the growing problem of identity theft tax fraud.
Avivah Litan, security analyst at Gartner, says the problem is that there are few checks on identity for online tax returns. That means anyone can falsify a return who has access to the proper information; like name, address and social security number—exactly the data that was compromised for as many as 80 million customers by last week's data breach of health insurer Anthem.
The rash of similar data breaches has driven the number of tax fraud cases into the millions according to Adam Levin, founder of Identity Theft 911. He says even though credit card breaches get more attention, they're actually less damaging.
"You call a bank, you change a number," he says. "Tax fraud, different story—Devastating, takes a long time to resolve. A national problem."
Connecticut's Department of Revenue Services has suggested a preventative step for those who think their personal information could be compromised: file your taxes as early as possible.