Tax software websites have made filing returns simpler for many taxpayers, but a new report reveals that they might not be as secure as one would hope. The audit, which was released by Internet security nonprofit One Trust Alliance, found that 46 percent of the e-filing services in the IRS Free File Program don’t pass certain cybersecurity standards.
The study’s findings
The IRS Free File Program, which was first implemented in 2003, allows anyone who made under $62,000 to file their taxes electronically for free. Around 70 percent of taxpayers are eligible to participate in the program, which works with the e-filing sites in the nonprofit coalition “the Free File Alliance.” Those who make larger incomes are also welcomed to use these services, but they are charged a fee for them.
The OTA study found that these sites either made the “honor roll,” which means passing by 80 percent or more, or completely failed. More often, these sites had basic security issues, like a lack of email authentication. This can lead to phishing emails or other fake emails in search for personal and financial information, which has been an increasing concern this particular tax season.
Warnings from the IRS
Earlier in February, the IRS reported that tax-related email fraud and malware are on the rise, increasing by 400 percent this season. Criminals have been sending emails and text messages or making calls posing as the IRS to obtain personal information or money from taxpayers. Fraudsters have been asking for such details as filing status and PIN information.
Since January, there have been over a thousand incidents of tax-related phishing and malware, which exceeds the yearly total for 2014 and is halfway to reaching the 2015 total. In the past, the IRS has focused on the phone scams that used to pose the biggest threat to taxpayers, but now it’s spreading information about these digital schemes.
Despite these numbers, many Americans remain indifferent to personal security. A survey from IDT911, a data security firm, found that 63 percent of taxpayers believe fraud could never happen to them and aren’t concerned by it. It also found that 20 percent of respondents don’t check that their wireless networks are secure when filing their taxes online.
What can, and will, be done
In a statement sent to CNBC, Tim Hugo, the executive director of the Free File Alliance, said that all companies within the alliance are evaluated and tested each year to make sure they meet the IRS standards of security and privacy. The OTA report has provided an important perspective on these efforts.
“Our members, working with the IRS, will carefully examine this report and take its recommendations under consideration in our continued efforts to ensure that Free File offers the industry’s most innovative and secure tax software.”
This tax season, it’s important to have a plan that will help protect you from the dangers of fraud and identity theft. Education is the first step, and that means making sure you know the signs of a scam. The IRS should never contact you via email, phone or text. It also means making sure you’re using a reputable site on a secure wireless network to file your return.
If you still have concerns, you can also invest in a service like Identity Guard that can monitor your credit file and alert you to certain activity that may indicate fraud.