Now that the tax season is here, the fears about fraud is more punctuated than ever before. Taxpayers were shocked when they heard about TurboTax suspending state tax filings over fraud concerns. Imagine getting the news that someone else filed your tax returns and claimed your hefty tax refund. Fortunately, this problem only affected the state filings, not federal taxes.
Well, this has changed. The details may be sketchy, but the FBI is now investigating claims that federal tax returns may also be affected by this fraud, putting your tax refund in jeopardy. The bureau interviewed taxpayers who claimed that IRS data was compromised, leaving room for fraudulent activities.
Imagine getting a message from the IRS acknowledging receipt of your federal returns even before you do your taxes. Given that all tax filings are done electronically, fraud has become a big threat.
While TurboTax 2015 free version allows taxpayers to make free tax filings, a rival, H&R Block, took advantage of the fraud cases surrounding TurboTax to attract taxpayers who did not want to fall victim to identity theft, among other types of fraudulent activities.
However, it is important to note that no system is perfect, especially when you consider the fact that both the IRS and most states had already put in place sophisticated systems to detect and help prevent theft.