Cheaper & Faster vs. Identity Theft & Fraud
Since the tech revolution in the 1990’s, many, including our financial service firm, use technology to make completing many tasks, simpler and cheaper.
Today, technology offers the false promise of making every task simpler for anyone and everyone. Experienced or inexperienced.
The market for do-it-yourself (DIY) tax preparation software has been booming. Companies, like Turbo Tax or Tax Act –just to name two– have created, an easier and cheaper way to prepare and file income taxes.
All of a sudden, your spouse, your grandma, your landlord, can become a “Do It Yourself” Expert!
For example, your helpful neighbor offers to assist you with your taxes. He tells you how simple is it to prepare and file your taxes. And your neighbor is so nice, he will not even charge you! But what happens to your financial information, especially your social security number and other personal data.
Professional tax preparation services, such as Jackson Hewitt, H & R Block, The Financial Advisors Group, and many many others lose revenue every year because cost-conscious consumers switched to doing their own taxes.
Seriously, would you want your plummer doing your taxes or fixing your pipes? Do you want your dear Uncle John, the 20-year lawyer, to handle legal problem — or prepare and file your tax returns? Or given the demands of your lifestyle, do you think you have the time to sit down and competently prepare your taxes yourself? Well, that’s what a former client –a nurse who puts in 60 hours a week at her hospital– told me.
While I know she can take care of my annual cold, I don’t believe that qualifies her to be a DIY expert on income taxes. Should my former client have a question, do you think she’ll get a qualified answer by “asking the TurboTax™ box!?!.
But the breakneck growth in tax preparation software — which can cost as little as $40, as opposed to the hundreds of dollars charged by professionals — has outpaced the industry’s ability to provide security and the government’s efforts to provide oversight.
In my view, the DIY tax preparation software business does not have sufficient financial incentive to erect the strongest possible security protections for consumers. Such steps can make accessing accounts less convenient.
Commercial tax preparation software vendors have a much different primary objective than tax agencies, like The IRS. They are driven by profit. The easier they make it to file a return, the more customers they can get and the more profitable they will become. There is no incentive for them to stop fraud.
The case against TurboTax
At the beginning of 2015, Intuit, the maker of Turbo Tax, stopped processing State returns in over 20 States because of possibilities of “hacking” and “identity theft.”
Last weekend, The Washington Post reported that two former Intuit employees said they objected to Intuit’s decision not to do more to halt seemingly fraudulent returns when they worked at the company.
One of them, Shane MacDougall, a principal security engineer at Intuit until last month, recently filed a whistle blower complaint with the Securities and Exchange Commission (SEC) alleging that Intuit chose not to take needed security measures because executives worried those actions would cut into the company’s market share.
“It’s kind of sad Facebook and Twitter and Gmail are more sophisticated than our tax preparation industry,” said Chester Wisniewski, a senior security adviser for Sophos, a security software vendor quoted in the WaPo article.
Professional tax preparers exist for a reason. They provide a safe and secure service. Use one today.
Anthony Rivieccio is the founder & the CEO of The Financial Advisors Group, celebrating their 18th year as a fee only financial planning firm specializing in solving one’s financial problems. Anthony, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, Bronxnet Channel 67 TV, The Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News and The Bronx Chronicle.
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