An uptick in fraudulent tax filings this year is causing Pennsylvania and neighboring state officials to place extra emphasis on making sure tax refunds are being delivered to the right people.
But security could come at a cost as the disbursement of refunds might be delayed.
“It may take longer to process certain returns, and that means there could be a corresponding delay in issuing some refunds,” said Joe Perone, spokesman for New Jersey’s Treasury Department. “How long is difficult to say, tax season just started.”
The alert about potential fraud stems, in part, from incidents linked to the nation’s largest e-file service provider, TurboTax. At least 18 states so far have reported incidents of suspicious TurboTax filings; on Thursday, its parent software company, Intuit Inc., suspended state refund processing for a day.
Pennsylvania wasn’t among the states reporting an incident, but still suspended almost 100,000 direct deposit refunds over the weekend.
On Monday, state Revenue Secretary Eileen McNulty said Pennsylvania would resume normal processing of returns with an extra layer of security.
New Jersey also implemented extra security, though officials say no TurboTax customers from the Garden state have been affected so far.
“We’re certainly aware of the situation and trying to protect the identities of the New Jersey taxpayers,” said Perone.
Two Delaware residents reported fraud linked to TurboTax last week, according to Director of Revenue Patrick Clark. He said extra security filters were being put in place, but the state did not suspend any refund payments.
“Two is not a tidal wave,” said Clark. “We’ll see a few thousand fraudulent returns a year, and we’re a small state.”
In fact, not only is Delaware disbursing refunds at a faster pace than last year — on average about four days compared with five and a half — but just half the number of returns are being held for additional screening as were held this time last year, according to Clark.
“I don’t anticipate that it will be a significant slowdown in time to issue a refund compared to last year,” he said.
Intuit Inc. maintains the fraud attempts were from information stolen elsewhere, and not from a security breach. The company resumed processing state returns last week.
“We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,” said Intuit CEO Brad Smith in a statement last week.
“We’re working with the states to remedy the situation quickly.”