Tax time starting a new phishing season

“Make sure the address for the page you are entering information on reads ‘https://’ as opposed to ‘http://,’” he advises. That extra "s" along with the "lock" symbol located along the bottom of a secure Web page signifies the transmission is encrypted.

But he adds, while securing data transmissions helps, it should not end security concerns, “You need to know where the data goes and how it is stored.  Many companies simply are not doing the right thing with the electronic data they receive.”

The "right" thing includes storing client data in encrypted form in the company database, then backing it up and removing it from the online system. “Data should be transferred to offline databases, where it is retrievable but not on an outward facing database.”

But how does a taxpayer or any consumer know what an e-commerce site is doing to protect its data?  “Read their disclosures or ask,” suggests Morse.  And do not stop at the mention of such reassuring words like "firewall," "SSL" and "encryption." 

“We call it buzzword bingo.  Many sites have the right products in place, but it does not mean they have the right processes in place.  Every site has a firewall and encryption, yet over 150 million records have been stolen since 2005 according to the Privacy Rights Clearinghouse,” says Morse, although he noted none on this list of large-scale breaches involved tax files as of yet.

“A lot of tax preparers are still old-school. They have a lot of paper in their offices,” says Cindy Hockenberry, an enrolled agent and tax information analyst with the National Association of Tax Preparers in Appleton, Wis. “I have never heard of a tax preparer’s office being broken into for the purpose of identity theft.” Those offices are typically protected with alarm systems and locks, she adds.  “And many preparers are also putting information on CDs offsite, under lock and key.” If they are also receiving electronic data, she assumes similar care is being taken to secure it.

But with more taxpayers going online for tax prep help and to file than ever before, a little extra caution, and some extra questions are in order to prevent sensitive information from getting caught up in some phisher’s net.

To help consumers choose wisely when giving access to their financial identities and data,  Hockenberry suggests:

• Get references: Ask friends and family whom they rely on for tax services.
• Check with Better Business Bureau to make sure no complaints have been filed.
• Verify the preparer is not on the IRS’ published list of unscrupulous preparers.
• Ask about experience, educational background and for professional affiliations.
• Find out if they open all year, or disappear when the tax deadline passes.
• Make sure the preparer signs the tax return.

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