Security Breaches: What to Know About Your Sensitive Data

A congressional report released earlier this summer confirmed H&R Block, TaxAct and TaxSlayer shared sensitive taxpayer data with Meta and Google. Any taxpayer that used the online services provided by these companies within the last five years is at risk. This includes those taxpayers that used the Free File Service offered as a partnership between TaxAct and the IRS.

The report outlined the shared data included: names, income, filing status, email addresses, refund due, eligible deductions and credits, and total tax paid. This information was then used, largely by Meta, to curate targeted ads and train AI algorithms.

This is deeply concerning for taxpayers. For those that prefer to prepare their own filings, online software provides the necessary tools to prepare a return. Taxpayers should not have to worry about the safety of their data when filing online.

This report also coincides with an effort by the IRS to offer its own proprietary filing system for certain taxpayers. Data security will need to be one of the top concerns when the new program is unveiled. This could prove challenging, considering the IRS just lost millions of taxpayers’ records and a new report was issued showing the IRS did not address key security weaknesses.

How to Safeguard the Tax Return Process

Data security should be of the utmost importance for taxpayers and tax professionals. If you believe any of your identifying information has been compromised, I would recommend applying for an Identity Protection PIN with the IRS. The IRS will generate and mail a new PIN each year, which greatly reduces the odds of someone using your Social Security Number to file a fraudulent return.

If you believe you were the victim of identity theft, please visit the identity theft IRS website for the best course of action.

I also recommend asking your current or prospective tax professional about their data security plan. Before working with a tax professional, you should know:

• How your data is stored

• Where your data is stored

• How many copies of your data are stored

• Who has access to the data

• What preventative measures are in place to prevent breaches

• What methods of secure communication are offered

If you would like additional information, the IRS released this publication in 2022, which outlines the data security measures tax preparers should have in place.