Ways Tax Prep Companies Are Fighting Tax Identity Theft in 2016

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New Steps TurboTax and H&R Block are taking to keep you safe

Taxpayers are planning to get their finances organized in time for the April 18 filing deadline. Unfortunately, tax security theft is causing a challenge. Identity thieves are also planning to file fraudulent returns.

For many years, phony tax returns have been a critical challenge for the Internal Revenue Service. According to the Government Accountability Office, IRS provides that it issued approximately $5.8 tax year in fraudulent tax refunds in 2013 alone. A 2012 approximation from the Treasury Inspector General for Tax Administration also established that due to identity theft over the subsequent five years, IRS could issue $21 billion in potentially fraudulent tax returns. Recent high-profile cyber security incidents have kept taxpayer on the edge.

New guidelines are in place to sort out this problem.  H&R Block and Intuit and other companies will share more data with the government to try to identify and rule out suspicious returns.

Tax filing companies will also enhance and add security features this year.  The guidelines require passwords to have more complex combinations of characters.  Users who exceed a specific number of failed login attempts will be locked out. Companies will use a two-factor authentication to help reduce the security breaches.

Some of these features are not new to tax prep software.  Nonetheless, some firms are changing how they operate. TurboTax now allows users to turn on two-factor authentication each time they log in the service. Hackers often rely on knowledge of the victim’s personal life to trick companies to given them targets’ login details by answering security questions. According to Intuit Vice President Julie Miller, Turbo and other software will actively notify users whenever changes are made to their accounts so as to sort out this threat and others.

H&R Block’s Ciaramitaro says the company will aggressively send more and new data to the government than it has done in the past to solve the tax identity theft problem caused by using outdated systems that identity thieves have mastered to outwit easily.


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