Some Free File security questioned

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Almost half of the companies offering online tax preparation and e-filing through the Internal Revenue Service’s Free File program have some security issues, according to the Online Trust Alliance, or OTA.

The good news: OTA found that 7 of the 13 Free File providers passed its security audit with flying colors.

The OTA is a Bellevue, Washington-based nonprofit that since 2005 has focused on ways to increase online trust. Its members range from Internet security companies to social media operations to traditional retailers.

Free File pass-fail grades

OTA put just 7 Free File companies on its self-named honor roll.

The findings were based, says OTA, on nearly 50 criteria, standards and internationally accepted privacy practices. In the OTA analysis, the companies that didn’t make the honor roll had problems with site security and did not take sufficient steps to help protect consumers from fraudulent and malicious email.

E-File free tax filing services that passed the test

  • eSmart Tax
  • FreeTaxUSA
  • H&R Block Free File
  • TaxAct
  • TaxSlayer
  • TurboTax Free File

Source: Online Trust Alliance

IRS, company efforts

The report obviously was not welcomed by the companies whose security protocols were questioned by OTA.

The Internal Revenue Service also bears some responsibility. The federal tax agency has been pushing increased online security measures via its Security Summit, an alliance of the tax software industry, as well as state departments.

“As the report rightly notes, the areas of security and privacy are evolving daily,” the IRS said in a statement to the Wall Street Journal, adding that the agency works with the industry to “encourage tougher standards.”

Persistent online tax crooks

The OTA examination is just the latest tax filing security concern to be raised this filing season.

Some TurboTax users, although not specifically connected to Free File users, have received phishing emails seeking to get customers to reveal more personal and tax data.

TaxSlayer also had issues, notifying some of its paid, not Free File, customers in January that hackers had accessed some accounts.

Both TurboTax and TaxSlayer made OTA’s Free File security honor roll.

At the IRS itself, hackers tried, but failed, in January, to get into the system the agency uses to issue electronic personal identification numbers used for electronic filing.

And just days after the IRS released its 2016 Dirty Dozen tax scams list, the agency issued an added warning to filers to be on the look out for phishing scams. The IRS says it has recently seen a 400% increase in these e-mail schemes and malware incidents so far this tax season.

Caveat taxpayer emptor

Sadly, as we learn every day, no online program, tax or otherwise, is 100% safe from criminals.

Yes, we rely on the companies — and tax agencies — offering services to do their best to keep us safe from hackers and identity thieves.

But we taxpayers are the ultimate last line of defense when it comes to the security of our returns. If you aren’t comfortable with the security measures of a filing program, don’t use it. And let the manufacturer know of your concerns.

If you do find that your personal data has been compromised, you can track your credit using free tools from myBankrate.

You can keep up with tax, and tax scam, news by subscribing to Bankrate’s free Weekly Tax newsletter. And follow me on Twitter: @taxtweet.