Techies Warn Self-Filing Taxpayers of Possible Identity Theft Threat

Leading tax preparation software companies Intuit (TurboTax) and H&R Block (TaxCut) may be producing software that puts customer tax data at risk, according to some data security experts. Both TurboTax and TaxCut leave taxpayer data files unencrypted and thus unprotected from hackers, and some people are concerned about the possibility of identity theft.

Security Firm PivX Solutions has issued a warning about the hacker potential. Here's how the tax information is stored: TurboTax stores taxpayer information in files that end in a .tax extension. These files, while not readable by a standard word processing program, can be opened and read by anyone with a TurboTax program. TaxCut stores taxpayer information files in regular text files that can be read by word processing programs, including Wordpad and Notepad.

"An identity thief would have all the information they needed to open a line of credit in a victim's name," said Geoff Shively of PivX Solutions. He expressed concerns about the vulnerability of tax files stored on shared network drives, and he also noted that anyone can sit down at a computer and open a tax data file using the appropriate tax software program without entering a password.

"Our clients know it's their responsibility to protect tax data on their computers," said Tom Linafelt, communications manager at H&R Block.

Intuit's Scott Gulbransen agrees. "We always suggest customers use the standard methods to protect their PCs - not just their TurboTax file - from viruses, hackers, etc."

Intuit has no plans to change security measures in the near future. H&R Block indicated it is considering full encryption of tax files in future versions of TaxCut.

You may like these other stories...

K2 Enterprises has announced its 2014 technology awards in 27 categories. The only clear message may have been that there was no clear message in a field marked by many good ideas, but no unanimous winners.The company, which...
We're all about QuickBooks this morning. First, read this late-breaking news from John Stokdyk, editor of AccountingWEB (U.K.), who is attending the QuickBooks Connect conference in San Jose, California. Then, for more...
Technology—specifically internet technology—has a record of disrupting tried-and-true methods of operation in ways that we often don't foresee. Look no further than the recent HBO announcement that they *gasp...

Already a member? log in here.

Upcoming CPE Webinars

Oct 30Many Excel users have a love-hate relationship with workbook links.
Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.
Nov 12This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Nov 18In this session Excel expert David Ringstrom, CPA tackles what to do when bad things happen to good spreadsheets.