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Estimated reading time: 2 minutes, 37 seconds

Intuit Battles New TurboTax Charges

Intuit's issue with publicity surrounding fraudulent efiling of state tax returns prepared via TurboTax took a new turn this week. The company is denying claims by two former employees that it put profits ahead of ethics. The Mountain View, Calif.-based company flatly denied the charges, saying it has been vigorous in combating fraud.

"These allegations are without merit and are based on these individuals' misunderstanding of the facts and their mischaracterization of our business," Intuit said in an extensive prepared statement.

Intuit halted filing of state returns prepared via TurboTax for about one day early this month after reports of ID fraud surface in several states. There has been no indication how many returns were involved. Intuit resumed efling saying its investigation showed no breach of its systems and that the fraud occurred outside its processes.

Intuit hired an outside law firm to investigate individuals in decision-making positions. "That review did not yield a single example where a deliberate decision was made to sacrifice customer security and privacy for financial gain. Because it doesn't happen," the company wrote.

The company has outlined its position on a web page at https://security.intuit.com/intuitsfightagainsttaxfraud.html.

Bloomberg reported an interview by cybersecurity-news blog KrebsOnSecurity, with one former employee, Robert Lee. Lee was quoted as saying Intuit refused to implement a ban on using a single Social Security number across multiple TurboTax accounts, and limit the number of tax returns a single account can file. Lee was also reported as saying management refused to adopt such precautions because fraudulent returns were profitable.

Another former employee, whose name was not given in Intuit communications, reportedly plans to make a statement to the Securities and Exchange Commission. Intuit said it would welcome talking to the SEC if necessary.

"Any suggestion that Intuit or any of its leaders made decisions to sacrifice customer security for financial gain doesn't hold water," the company said.

Intuit said the money made from fraudulent returns is immaterial and that it also cannot get paid via the refund transfer process for rejected returns.

"There is absolutely no benefit to Intuit to try to process a fraudulent return. Intuit does not get paid through the refund transfer process unless the IRS accepts the return as valid and actually issues a tax refund," the company said. "Moreover, Intuit's market share is not based on submitted returns; it is based on accepted returns."

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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