Vermont Public is independent, community-supported media, serving Vermont with trusted, relevant and essential information. We share stories that bring people together, from every corner of our region. New to Vermont Public? Start here.

© 2024 Vermont Public | 365 Troy Ave. Colchester, VT 05446

Public Files:

For assistance accessing our public files, please contact or call 802-655-9451.
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Tax Department Halts Refund Over Fraud Concerns

Vermont’s Tax Department has put a temporary hold on issuing income tax refunds to taxpayers who have already filed returns because of suspicious activity with a third-party tax filing program.

Returns sent electronically to the Tax Department through TurboTax, filing software made by Intuit, have had an unusually high amount of alerts, Gov. Peter Shumlin said Friday. As a result, the state decided to halt issuing returns on Wednesday night, he said.

“This is the new, ‘How do you rob a bank?’ It kind of used to be Bonnie and Clyde, now you figure out a way to exploit a technology, TurboTax, to get somebody else’s refund. This is not just a Vermont problem, it’s happening nationally and the IRS is all over this,” Shumlin said in an interview.

Intuit said Friday it is working with states that have seen “an increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds.” Intuit stopped transmission of electronic tax returns to states on Thursday.

The company said it is working with a third-party security firm on a preliminary investigation of recent fraud activities. So far, instances of fraud do not appear to be the result of a security breach of its systems. Rather, the information used to file fraudulent returns was obtained from other sources outside the tax preparation process, according to the company. The investigation is ongoing, however.

"We've identified specific patterns of behavior where fraud is more likely to occur." - Brad Smith, Intuit

  “We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,” Brad Smith, Intuit president and chief executive officer, said in a statement. “We’ve identified specific patterns of behavior where fraud is more likely to occur. We’re working with the states to share that information and remedy the situation quickly. We will continue to engage them on an ongoing basis in an effort to stop fraud before it gets started.”

Shumlin said no state systems have been compromised, but Tax Commissioner Mary Peterson chose to halt refunds until the problem could be solved. Other states have also suspended tax refunds.

“What the commissioner has wisely said is, ‘Let’s just put a hold on refunds for a few days and work through these red flags, individual, one-by-one, to make sure that no one’s ripping off Vermont’s taxpayers,” the governor said.

Shumlin said the delay in refunds is likely to last a few days.

"What I'm trying to protect Vermonters from is having their money ripped off by people who don't deserve it." - Gov. Peter Shumlin

“What I’m trying to protect Vermonters from is having their money ripped off by people who don’t deserve it,” he said. “This isn’t going to be a long pause, but we really do want to work through why we’re getting so many red flags. The other states, I think, are doing the same thing, taking a brief pause on refunds so we can get to the bottom of this.”

Intuit has set up a toll-free number for customers who believe they could be victims of fraud. The number will provide direct access to specially trained agents who can assist. The company is also providing identify protection services and free credit monitoring.

“We understand the pain and frustration identity thieves cause taxpayers,” Smith said. “We know how important tax time is and our number-one priority is making sure peoples’ returns are filed timely, accurately, and safely.”

This story was originally published by the Vermont Press Bureau and reprinted under a partnership with the bureau.

Neal is a a reporter for the Vermont Press Bureau. He also files reports for Vermont Public Radio.
Latest Stories