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Online Tax Filing - Addressing Security Concerns

Last year, over 69 million Americans used electronic filing, also known as e-file, to file their income tax returns. Many of these individuals also chose to use an online tax filing service, or the IRS Free File program. In fact, the IRS estimates that in 2007, millions of Americans will take advantage of this option. Yet, while this number only represents a small percent of those filing a federal tax return, the number increases each year as more and more taxpayers discover the convenience and ease of using an online tax filing service.

There is still, however, a significant number of consumers who are skeptical about filing their taxes online. Many of these individuals don’t trust Internet security, and will tell anyone who cares to listen that they would “never buy anything online, let alone pay their taxes on an Internet web site.” What these people don’t understand, however, is the high level of security that is mandated by the IRS for any company that establishes an IRS e-file online tax filing system. In addition, most online tax filing sites will allow you to deduct their fee directly from your refund, thereby eliminating the use of a credit card.

In order to use online tax return preparation software, a tax preparation vendor must apply for and receive third party privacy and security certification. They must also be in complete compliance with federal regulations regarding the privacy of taxpayer information for all customers. Additionally, these companies may not use any information gathered in the process of preparing a return for any other reason than that which has been authorized by the taxpayer.

All sites that are linked on the IRS e-filing network must meet with certain security guidelines. The site must support 128-bit encryption, a feature that causes the data that you enter on the screen to be scrambled before it is sent to its ultimate destination. The encrypted code is then unscrambled on the receiving end, thus preventing hackers from accessing your personal information.

Secure sites will display a web address of “https” as opposed to “http” on non-secure sites. Additionally, there might be a padlock icon in one of your tool bars also indicating that the site is secure. You can also check the level of the site’s encryption by either right clicking in the body of the text or clicking on the “file” tab at the top of the screen, and then selecting “Properties.” Either way, a window will be displayed indicating whether or not the page is encrypted, as well as the level of encryption applied. Be safe, not sorry!

However, don’t allow concern over security as an excuse to not file your taxes online. If you stop and think about it, you are probably less secure going to an income tax preparation service office and dealing with a stranger to whom you are giving access to all of your personal information. Can you be absolutely certain that your most confidential information is secure, and will not be divulged to any outside party? Probably not!


Contributor's Note

Please contact the author for permission to reprint this article

Contributed by taxman on July 9, 2008, at 8:10 AM UTC.

PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
Tax Preparation Service & Tax Filing Online Specialist
Accounting & taxation services
www.hbsfinancialgroup.com

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