By Jim Donovan

By Jim Donovan:

UPDATE: Intuit Inc.announced that TurboTax has resumed e-filing of state income tax returns as of 3 p.m. Pacific time today. The resumption comes after the company temporarily paused transmissions upon seeing an increase in suspicious filings. Intuit, the parent company of Turbo Tax, believes that the instances of fraud did not result from a security breach of its systems. Intuit says it implemented targeted security measures to combat the type of fraudulent tax activity that it is seeing.

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TurboTax, the country’s most popular do-it-yourself tax preparation software, said Friday that it has temporarily stopped processing state tax returns because of an increase in fraudulent filings. The move comes after a number of state agencies across the country reported a rise in filings with stolen personal information.

Intuit, the parent company of TurboTax, says that so far there has been no security breach of its systems. Instead, it believes personal information was stolen elsewhere and used to file returns on TurboTax. Intuit is working with security company Palantir to investigate the problem.

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Most victims found out that a fraudulent tax return was submitted in their name when they received a rejection notice after filing their returns. The company says there haven’t been issues with federal returns to date because the Internal Revenue Service has implemented stronger fraud detection policies.

Intuit said state tax returns already filed when the halt began on Thursday will be transmitted as soon as possible. Consumers can still use TurboTax, and the company will file the state tax returns when the halt is lifted. The company expects to start processing state returns again on Friday with increased fraud protections.

“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. “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.”

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TurboTax processed 30 million tax returns last year.