Published April 15, 2024 • 5 Min Read
Tax season is underway – and so is tax scam season. It’s one of the busiest times of the year for cybercrime, as it presents the perfect opportunity for criminals to steal personal information and critical data.
During tax season, there is a lot of personal information in circulation – tax filers are logging into online platforms or sending income, employment and contact details to an accountant or bookkeeper. People are logging into tax accounts, checking their emails for return information and sharing receipts, social insurance numbers and sensitive family data. All of this back and forth creates an environment for cyber criminals to steal money and data from individuals.
Here are four ways to stay safe as you prepare and file your taxes.
1. Protect your tax accounts
Your tax information contains all the details cyber criminals need to steal your identity – your social insurance number, record of employment, family status and bank account details. This is why it’s critical to protect your tax accounts from hackers. Be sure to create strong, unique passwords and enable two-step verification (also known as multi-factor authentication) whenever it’s available.
2. File your taxes on a secure network
It’s an important rule of thumb to never access personal accounts or sensitive information while using an unsecured network – that is, a Wi-Fi network that doesn’t require a password, such as in a library or café. The same goes for your taxes. If you’re filing your taxes online, it’s best to save it for when you have a secure connection, like on your home Wi-Fi network. If you do need to use a public network, use a VPN so you can protect your private information.
3. Watch out for phishing attacks
Throughout the year, cyber criminals will pose as legitimate organizations to steal your information. Through phishing attacks, they will send emails, text messages and DMs to try to trick you into giving up account details or personal data.
During tax season, these attacks are harder to spot, as you may be expecting a text or email about your taxes – so a communication from someone who claims to be from a legitimate tax agency, such as the Canada Revenue Agency (CRA) or Internal Revenue Service (IRS) – seems probable and believable.
What’s more, the criminal networks behind these scams are driving more convincing, frequent scams – so traditional red flags, such as grammar and spelling mistakes – aren’t the tell-tale signs they used to be. There are, however, some things to watch out for:
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A request for data. Any email, text or DM that claims to be from a tax agency and is requesting account or personal information is not legitimate. The CRA and IRS, for instance, will never request information through these channels.
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Unsolicited communication through email or text. The CRA only sends emails to notify a tax filer that there is a secure message in their CRA mailbox. The IRS, meanwhile, initiates all contact from the United States Postal Service. They will only call as a follow up to a letter. Other tax agencies around the world follow similar protocols.
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A sense of urgency. Some messages about taxes claim that “urgent action” is required to avoid arrest or penalties. Legitimate organizations won’t use those kinds of tactics or language, even if your taxes are past due!
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Attachments. Phishing scams will often contain suspicious links or attachments. Don’t open them! These are designed to steal such data as log-in credentials, account numbers, social insurance numbers and other sensitive data.
The CRA publishes scam alerts on their website so you can stay up-to-date on the latest tax scams and know how to protect yourself.
4. Ask about your tax preparer’s practices
If you’re using the services of an accountant or bookkeeper to prepare your taxes, you’ll want to know how secure their systems are. After all, they’re going to have access to all of your personal details, so it’s important that they have robust security practices in place to keep them safe.
Whether you’re working with someone new or a professional who has done your taxes before, it’s worth asking them some key questions, such as:
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What are the security measures in place to exchange files? Ask about email encryption and secure servers they may have for sharing confidential files.
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Who will have access to my information? Find out what the protocols are for how files are stored and secured on their premises. Do employees need to document their access to client files?
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What type of network security do you have? Your tax preparer should have a secure, password protected network, anti-virus software installed and a strong password policy in place.
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Do you regularly back up data? You want to know that your data is safe in the case of a hack or system failure.
Tax season can be taxing – and you don’t need to add the extra stress of getting scammed by a cyber criminal. If you receive a message from what appears to be a tax agency, don’t rush into opening it or responding – take a moment to determine if it truly seems legitimate. If in doubt, delete it right away and contact your tax agency directly using the phone number on their website. Remember, stay up to date, stay alert and stay safe.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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