Privacy Tip #51 – Check Up on Your Tax Preparer’s Data Security Measures

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We have written before about the ability of hackers to file false tax returns to get fraudulent refunds by using the IRS website, and how hundreds of thousands of Americans have become victims of tax fraud.

The IRS issued a statement last week warning tax preparers to be on the alert for hackings that allow criminals to hack into the tax preparer’s system by using remote technology, then use the tax preparer’s credentials to file a false tax return on behalf of his/her clients. The IRS indicated that it was aware of more than two dozen incidents in the past several weeks when false tax returns were filed through tax preparers’ hacked systems.

The IRS warning came right on the heels of the Treasury Inspector General for Tax Administration’s audit report of the IRS which showed that almost 1.1 million taxpayers were victims of employment related identity theft between February 2011 and December 2015.

The Inspector General’s Report further found that 621,000 taxpayers were actually affected by tax fraud, and that 355,000 taxpayers’ accounts were actually breached by unauthorized individuals.

Your tax preparers have all of your most valuable personal information that can be used to commit fraud if it gets into the wrong hands. Many tax preparers are solo or small companies, which may not have the most sophisticated data security measures, and yet they have very valuable data.

Whether you use a tax preparer to file taxes on a quarterly or yearly basis, it is a good idea to check with your tax preparer now (before they get into their busy season), particularly with the IRS warning, to make sure s/he has “all available security measures on their tax preparation software.” Send this blog post on to your tax preparer and ask him/her to confirm that s/he has a robust security program in place to protect your personal information, including security measures to prevent the system from being taken over remotely.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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