As a precaution against “enormous challenges related to the pandemic,” the
To mitigate this concern there are steps you can take this tax season, as well as year-round, to help keep your clients’ personal data safe.
Evaluating data security should start with a look at your own habits. The collecting and storing of personally identifiable information should never be taken lightly. Something as simple as downloading a document with client information to your personal laptop may inadvertently lead to stolen or compromised information..
Minimizing the amount of data you collect from clients in the first place is a strong start to prevent slips from happening. A good litmus test is to ask yourself if the information you’re collecting is proportionate to what the data will be used for. When you must collect personally identifiable information, do so in person or over encrypted email and have a clear retention policy for clients to understand how long you’ll store their information.
A recent survey of Raymond James clients revealed that 70% are interested in how they can better protect their personal and financial information. During tax season especially, equipping your clients with best practices is essential to keeping their data safe.
Just as you share your security practices and controls with them, advise them to ask for their tax preparer’s policies or if they’re using an online service, check its privacy statement. The preparer should be able to provide its overarching strategy to prevent its systems from being hacked, as well as outline for how long and to what purpose it will store and use personal data.
Clients also need to know what they should expect from the IRS so they’re better equipped to recognize a phishing attempt. For example, the IRS will never call, text or send social media messages with a request for personal or financial data. If a client receives one of these messages, they should not give any information and let their tax preparer know.
Similarly, if their tax preparer calls them from a strange number or they don’t recognize the voice, they should ask to be directed to the person they do know or just hang up and call the office back directly. For a more in-depth understanding, clients can review recent phishing and online tax scams, as well as report any new ones they come across, on the
Another strong line of defense is ensuring your client knows what to expect on their return. A common warning sign of tax fraud is a notice claiming to be from the IRS that has statements such as “more than one tax return was filed with your Social Security number” or that they owe additional tax. This can be especially confusing if the client’s tax situation is complex.
While directly stolen data is what often makes headlines, information gathered under one context and then taken or sold to others is as much, if not more, of a threat. That’s why protecting your clients from tax fraud starts with holistically protecting their identities year-round. They should audit data security in all areas of their lives by reviewing privacy settings, ensure they use unique passwords with multifactor authentication where possible, and protect both physical and digital financial documents with locks and passwords.
So what if, despite best efforts on all sides, your client experiences tax fraud? First, they should let their tax preparer know, and they may need to complete an
They should also look into credit monitoring services to watch for new accounts or other activity initiated in their name by scammers. Many credit cards and banks now offer credit monitoring to customers free of charge. In the long term, they might consider identity theft insurance, which is sometimes offered through homeowner’s or other insurances.
Ultimately, while filing taxes electronically may induce nervousness in some of your clients, by taking smart precautions, it can actually be the more secure option considering the increasing instances of mail fraud (by one estimate, mail theft increased
The best way to serve clients this tax season is to remain vigilant in protecting their data and educating them on the latest cybersecurity threats and best practices.
