Poor Information Security Habits Put Taxpayers at Risk

Four in 10 taxpayers in a new study said they were worried about falling victim to tax fraud or tax identity theft during tax season, but 45% admitted that they stored tax paperwork in a box, desk drawer or unlocked cabinet at home or at work.

Not only that, one in five said they did not shred tax paperwork or physical documents containing sensitive information before throwing them away.

Shred-it, an information security service provided by Stericycle, commissioned the mobile survey, which was conducted by Pollfish on Feb. 5 among 1,200 respondents 18 and older.

Forty-eight percent of survey respondents said they would file their own taxes online via tax preparation software, while 37% said they would file with a certified tax preparer.

Forty-four percent in the latter group said they did not know how the person preparing their tax returns would store or dispose of documents containing their personal information. This finding underscores the need for conversations around data protection during tax season, according to Shred-it.

“The Tax Season and Fraud Prevention Report reveals how common these risky tax filing habits are and how they put taxpayers in jeopardy for fraud or identity theft,” Monu Kalsi, vice president of marketing for Stericycle, said in a statement.

“As we near the April 15 tax filing deadline, we encourage everyone to reassess how they are handling their own tax documents that contain sensitive information and also question how those preparing taxes for us are doing the same.”

Risky security habits could be contributing to tax identity theft and tax fraud, according to the report, which found that 26% of respondents knew someone who had been a victim of tax fraud.

Tax fraud fears hit millennials hardest, with 43% saying they were worried about becoming a victim of tax fraud or tax identity theft, compared with 34% of baby boomers and 33% of Gen Z taxpayers.