Quatloos!

Fraudulently filed tax returns through TurboTax has Kentucky and other states putting a temporary hold on processing all electronic returns. The Kentucky Department of Revenue anticipates just a few additional days to the refund process, with the goal of returning to normal processing late next week.

Up to 18 states are reporting significant upticks in fraudulent activity and there may be a common thread: tax preparation software.

Individual State Departments of Revenue are loathe to name names but have been quick to point the finger away from their own systems.

The State of Alabama Department of Revenue released a statement yesterday about fraud concerns, saying only, “The fraudulent filings originate from data compromised through a third-party commercial tax preparation software process and were detected through ADOR’s fraud detection systems.” They were quick to assure taxpayers, however, that “[o]ur systems have not been compromised.” Just two weeks into tax season, however, the number of suspicious returns in the state has already hit 16,000, all of which were “filed suspected of fraud from the third-party commercial tax preparation software.”