Identity Theft, Information Security, and Your Tax Preparer


Today’s post brought to you by someone on my FaceBook tax forums.

Said person was seen complaining that his tax software provider (also my tax software provider) was no longer supporting, wait for it—Windows XP. Yes, that’s right, Windows XP. In case you missed the memo, Windows XP was released in August 2001 (no, that’s not a typo) and Microsoft stopped selling it in 2008. Microsoft stopped supporting it in April 2014. That’s almost two years ago. What’s the big deal you ask? Well, to put it succinctly, security patches. The “support” Microsoft stopped providing to XP users in 2014 was, among other things, security patches.

I try to run a tight ship and to provide value for my customers, so I’m not constantly upgrading my computers and software. I do, however, take information security and identity theft extremely seriously. Indeed I see them as one of the largest threats to the viability of my tax practice. Identity theft issues erode my customers’ trust in the computers and software that are necessary to my job. Should my practice ever experience a data breach, the costs of complying with the laws concerning customer notification and restitution could make it difficult for me to continue in business (even with good insurance in place). Consequently, I consider it negligent to be running software that is no longer getting security patches.

Given the prevalence of identity theft and the sensitivity of the information used to prepare your tax return it is important for you to consider how your paid preparer protects that information. While it is unlikely that you will get your preparer to divulge all of the details of his or her security plan, he or she should be willing to answer some questions, for example:

  • What version of Windows are you using?
  • Are you running a firewall, anti-virus, and anti-malware?
  • How often do you update your virus definitions and run scans?
  • What are some of the other measures you take to protect my information?

If your tax professional cannot or will not answer these questions it may be time to start looking for a different preparer. In my next post I will give you my best tips on how to choose a preparer that meets your needs.