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...

No field likes its buzzwords more than technology, and one of today's leading terms is "the cloud." But it's not just a matter of knowing what's fashionable. Accounting professionals who know how to use...
There is a growing trend of accountants moving away from traditional compliance work to more advisory work. Client demand is there, but it is up to the accountants to capitalize on that. What should accountants' roles be...
 Event Date: April 24, 2014 In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel. David will introduce the Macro Recorder, which transforms actions...

Upcoming CPE Webinars

Apr 17
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.