NORTH ADAMS, Mass. — State tax refunds are being delayed as the Department of Revenue investigates reports of fraudulent returns through the popular TurboTax service.

Some 19 states are looking into potential tax fraud being perpetrated through the Intuit Inc. tax preparation software by individuals using identity theft to file for refunds.

"Our first concern is the protection of Massachusetts taxpayers' personal information," said DOR Commissioner Amy Pitter in a statement. "We want to be sure that the tax refunds currently in the pipeline are being sent to the legitimate taxpayer. We have temporarily stopped issuing refunds in order to further scrutinize the returns based on new information that we received in our discussions with other state agencies and the country's largest provider of third-party tax preparation software."

Forbes.com first reported early Friday that Minnesota had stopped accepting state filings through TurboTax; Intiut on Thursday began temporarily holding state filings while it worked with state governments to resolve the issues.

The Vermont Department of Taxes also halted state refunds.

"We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity," said Brad Smith, Intuit president and chief executive officer, in a statement posted on the company's website. "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."

The DOR has about 160,000 returns claiming refunds in its system. All will "receive additional scrutiny before refunds are released to taxpayers," DOR officials said in a statement.

"The Department already employs a vigorous fraud filter system that was responsible for stopping $25 million in fraud in the last filing season. However, in an abundance of caution, DOR will further review returns currently in the pipeline before releasing refunds," it continued.

DOR said its data was secure and uncompromised and that the fraud occurred from breaches external to its system.

According to media reports, the fraud was discovered by a number of tax filers in several states who signed into their accounts to find someone had already used their names to file for refunds.

If the state cannot authenticate a return, the taxpayer will be contacted by mail requesting additional information and identity verification.

"We want to minimize the impact to taxpayers," said Pitter. "But it is essential that we take all necessary precautions to protect taxpayers and reduce the cost of fraud for the commonwealth."

The Internal Revenue Service said it had strengthened its protection systems and continues to accept income tax filings; taxpayers are encouraged to file their forms an normal. In January alone, it had accepted more than 14 million returns and issued 7.6 million refunds, officials said in a release.

Masaschusetts taxpayers with concerns about their individual return should contact the Department of Revenue's customer service group at 617-887-6367. TurboTax customers who believe they may be victims of fraud can call toll-free at 1-800-944-8596.

• Most Read

• Most Comments

• All News

• Blogroll

• Photos