Tax Prep Software Gets A Security Overhaul

It’s almost time! Everyone’s favorite time of year is almost here, and no, we don’t mean the holidays. In the US, it’s almost tax filing time!

While citizens and politicians alike rant about the wasteful use of tax dollars–in practically any country around the world–there’s one overlooked source of tax waste that starts before the government ever gets to spend a dime: tax return fraud. In the US alone, the Internal Revenue Service distributes between $4 billion and nearly $6 billion each year in fraudulent tax returns, mostly to organized identity thieves. This type of fraud is often a byproduct of a previous identity theft incident, meaning the criminal gained access to the taxpayer’s Social Security number–often through large-scale hacking events and data breaches–and then used it to file paperwork under the citizen’s name, but with his own address and payment information.

It is this type of data breach that has tax preparation software developers taking extra measures this year. Consumers who use any of the popular tax prep titles like TurboTax, TaxAct, or TaxSlayer (to name a few) will find stricter log in protocols, password restrictions, and even a three-strikes system that will lock them out of the software if they mistype the password too many times.

One of the most significant measures will come from TurboTax, and it’s something consumers have been asking the IRS to do for some time. Under the software’s update online portal, users will be alerted if a second account has been created under their Social Security numbers. Currently, victims of tax return fraud only find out a thief has filed under their names and numbers when their legitimate return is filed and then rejected for being a duplicate. By then, the thief has made off with and possibly even spent the refund payout. Instead, TurboTax is heading that possibility off by establishing an alert that a second account exists. Even better, Intuit, developer of TurboTax and other tax filing software, will alert the user if there are changes made to the account, such as a change of address or change in bank account and payment information.