A Guide to Protecting Small Business Tax Data

By Pam Baker | Posted February 17, 2016

No small business owner enjoys prepping, filing, and paying taxes. But this year, data security issues add an element of risk to an already-painful process. To date, the IRS has been hacked twice. Reporting on the IRS hack, Jonathan Chew notes "This year's attack follows a massive data breach at the IRS in 2015, when hackers stole information from 330,000 taxpayers to successfully file bogus tax refunds and obtain $50 million in federal funds."

If you're a small business owner affected by these data breaches, the stolen information could be used against you—either now or later—and you may also at risk of being hacked when you file your taxes.

This year, in addition to offering small business tax tips and money-saving tax provisions, experts recommend ways that you can protect your business data leading up to—and during—the tax-filing process.

small business tax tips

Cybercriminals Target Small Business

How did cybercriminals manage to hack the IRS in the first place? According to the article, they "used personal taxpayer data that was stolen elsewhere to help generate the PINs." Indeed, sophisticated cybercriminals hack lower targets first to obtain the information they need to attack higher targets like the IRS. Quite frequently these lower targets are small businesses.

For example, the now infamous Target hack began as an attack on one of the retail giant's small business vendors. And that model has been used in many data hacks since.

It's a vicious circle. Criminals steal data and security credentials from small businesses to attack large businesses and government agencies. Then they use the information they get from large businesses and government agencies to attack small businesses and swindle their tax refunds.

How can small business owners break this cycle, keep their data safe, and protect their tax refunds and credit scores?

Certainly you'll want to secure your databases, desktops, and mobile devices. For advice on how to do that, check out security-related articles on Small Business Computing. But to protect your tax information in particular, Tyler Moffitt, senior threat research analyst with Webroot, offers these small business security tips.

Small Business Tax Tips: How to Protect Your Tax Information

1. Avoid using search engines

Click on links that take you straight to the source. Poisoned search results may inadvertently lead you to dangerous, malware-infected websites. If you need tax-related information or need to download tax forms, go directly to www.irs.gov—the official IRS website—instead of using a search engine.

2. Update your software

Always download the latest updates to Windows, as well as any non-Microsoft applications you use to read PDF documents (such as Adobe Reader or Foxit Reader). These updates help prevent malware infections that take advantage of security vulnerabilities in those products.

3. Start with a clean machine

When preparing and collecting the information you need to file your taxes, you should always start the same way: perform a full scan of the computer with an up-to-date antivirus program. Do this before you log into your bank account or to any other website that may contain your private financial data, including your online tax filing service, if you use one.

4. Practice good password hygiene

Make sure you use complex passwords and change them frequently. If you have trouble remembering your passwords, use a credible password manager. For added protection, leverage two-factor authentication like biometrics if your computing device supports it (e.g., a thumbprint), and then use a second method of authentication such as a long password. Do not auto-save your login information, and when you finish an online session log out of any sites with sensitive account information, such as TurboTax or H&R Block.

5. Don’t use public Wi-Fi

If you check tax information in a public setting, do not connect to Wi-Fi hotspots—use your cellular network connection instead. Most hotspots and public Wi-Fi networks lack adequate protection and place your mobile devices, tablets, and personal computers at risk. Also, cyber criminals often create networks or URLs that sound similar to those in coffee shops, airports, or similar venues. Turn off Wi-Fi and Bluetooth settings on your computing devices if you don’t need them.

6. Consider your Web browser options

Do not use Internet Explorer to file your taxes. If you use Firefox, install the NoScript, AdBlock Plus, and the HTTPS Anywhere add-ons. When used in combination, they can prevent online threats from infecting your computers.

7. Don’t store personal information on your hard drive

When you're finished filing your taxes, collect your forms and tax return documents and burn them to a CD or DVD. Delete the tax record documents and returns from your computer's hard drive and clear the browser's history using the browser's privacy settings.



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