The information you provide to your tax preparer is as sensitive as it gets. The assumption is that the tax preparation company is only using your data to prepare your taxes. In an enforcement action against Beneficial Corp., the FTC alleged that the company was engaged in unfair and deceptive practices by “using information collected for tax preparation services for unrelated loan solicitation purposes,” and ordered the company to stop that practice. The FTC recently sent notices to five tax preparation companies that they, too, could face civil penalties if they are using the same practices that landed Beneficial Corp. in the FTC’s crosshairs.
The warning to those five companies can be accessed here.
The FTC’s warning to tax preparers is a reminder to all of us to check with our tax preparers on how they are collecting, using, disclosing, storing, and retaining our tax information, which includes a vast amount of our personal information. The IRS has issued guidance for tax preparers on how to implement a data security plan and how to follow the FTC’s Safeguards Rule. Using this guidance is a good start to discuss data security and the protection of your sensitive personal information with your tax preparer.