Tax Season - Free Money for Hackers

By Drew M Smith

With the flurry that is tax season, there is a growing trend of hacking personal data in tax returns. Your tax information is just as vulnerable as your other personal data. The number of tax returns processed from the beginning of the year until the cutoff date of April 15th will be close to 150 Million, with billions of dollars of taxes processed as corporations and individuals file their year’s earnings.¹ All of the information contained in your tax returns are a perfect target for hackers and thieves.

Unfortunately, the IRS was not as secure as they made themselves out to be. In early February of this year, they reported that hackers had compromised their mainframe. Using malware and phishing, hackers generated fake E-File numbers and profiles. These fake numbers ended up stealing over 464,000 social security numbers, of which 101,000 was used to generate the pin numbers needed to file the tax returns. The goal was simple; to steal the refunds that other people have earned. The IRS did notify those affected and supposedly was not related to an incident where the IRS could not accept E-File returns.²

This problem is potentially more serious than simply snatching up the refunds. It could end up costing the victims thousands of dollars and delay legitimate refunds. In certain circumstances, victims could face fines and penalties that they did not justly earn, since the fraudulent returns may not match up with actual records.

Like with cyber security, the best way to prevent a hack is to give as little information as possible. TurboTax, the online auditing service is considered to be protected, however any online service can be vulnerable. Emails from legitimate looking companies can be phishing expeditions that may lead to compromised data. Never log onto a website from an email, always log directly from a legitimate website. Be sure to keep all relevant information in a secure place. Never open up your tax program from an email received on a pop-up. If it’s suspicious, stop and check with your tax professional. This time of year is a hacker’s Christmas, do your part to ruin it.

¹http://www.usnews.com/news/articles/2014/04/15/tax-day-some-facts-about-the-irs-filing-deadline
²http://www.thefiscaltimes.com/2016/02/10/Hacked-Again-Can-IRS-Protect-Your-Tax-Info-Year