Online tax preparation company TaxAct has notified 450 of its customers that their accounts were accessed by unauthorized third parties between November 10, 2015 and December 4, 2015.  As a result of this unauthorized access, these customers’ formerly filed income tax returns were electronically taken by the hackers who were able to get their victims’ names, Social Security numbers, drivers’ license numbers and bank account information.  This information can be utilized by identity thieves for purposes of income tax identity theft.  The problem does not appear to have been as much a security breach by TaxAct as a lack of taking proper security precautions by their customers because the accounts were accessed through usernames and passwords stolen from other sources and then used to attack the victims’ accounts with TaxAct.  This is a major problem when people use the same username and password for multiple accounts.  If your security is breached at one company, your safety everywhere is threatened.  TaxAct also as a precaution froze the accounts of approximately 9,000 of its customers and informed them by email that in order to access their accounts this year, they will need to provide additional verification.

A few days ago, just a week after TaxAct’s customers were notified of the data breach, TaxSlayer, another online tax preparation company was also targeted by hackers, but no accounts were compromised.  One reason for this is that TaxSlayer requires further verification if someone attempts to log into their account at TaxSlayer from a different computer than the one used to initially set up the account.  This simple security measure can go a long way toward protecting online taxpayers from income tax identity theft.


First and foremost, everyone should use a unique password for each and every online account that you have.  It is not that difficult to do.  In addition, whenever you can use dual factor authentication, you should take the opportunity to do so.  With dual factor authentication, you receive a one time code by way of your smartphone each time you go to your online account.  Although this may seem like an inconvenience.  It is extremely useful and not terribly time consuming.