Is Tax Preparation Software Safe To Use?
Tax season is one of the most popular times for people to become victims of scams. According to the IRS, tax refund fraud is expected to soar this tax season, reaching $21 billion this year compared to just $6.5 billion two years ago.
Another cause for angst this tax season is the potential theft of your personal and financial information from online tax return preparation vendors. Recently, TaxAct reported that approximately 450 customers may have had personal and tax return information stolen, leading the vendor to freeze more than 9,000 customer accounts,1 and TaxSlayer reported 8,800 of its customers' personal information may have been compromised.2
Online DIY tax software packages contain a treasure trove of private personal and financial information--full names, dates of birth, social security numbers, and bank account information.
TaxSlayer and TaxAct say they don’t believe their systems were breached. They believe a third party used username and password combinations obtained from outside sources to illegally access their customers’ accounts.
While there is nothing you can do to prevent the online tax preparation vendor’s vulnerability to security breaches, there are steps that you can take to minimize the risk of having your information stolen. These steps include filing your tax return as early as possible, monitoring your credit frequently, using a different password for each account and each website that you visit, using strong passwords, changing your passwords frequently, and making sure that your computer is running reputable, up-to-date antivirus software.
On a related note, beware of scam phone calls in which callers pretend to be from the IRS, then either trick you into sending them money by demanding immediate payment of back taxes, or trick you into sharing private information by claiming that you’re owed a refund. The IRS website provides tips for identifying this kind of scam phone calls: https://www.irs.gov/uac/Newsroom/Scam-Phone-Calls-Continue%3B-IRS-Identifies-Five-Easy-Ways-to-Spot-Suspicious-Calls.