5 Reminders to Help Keep Your Data Safe During Tax Season

Each year during tax season, as businesses and individuals prepare to gather and transmit their most sensitive financial information to their accountants and the IRS, bad actors increase their efforts to take advantage of vulnerabilities and lapses in focus. The good news is that by doubling down on a few simple steps that should already be in your routine, you can keep your data safe and your peace of mind intact.

1. Be Vigilant Against Phishing Attempts

Cybercriminals know tax season brings an increase in emails, document requests and online communications. They often disguise themselves as trusted contacts, including even posing as your accountant or the IRS, to trick you into sharing login credentials or sensitive documents.

In recent years, bad actors have increasingly relied on artificial intelligence (AI) to craft highly convincing phishing messages and fake documents. With AI, cybercriminals can mimic writing styles, generate realistic-looking emails, and even create deepfake audio or video messages that are much harder to spot as fraudulent. The days are over where you could spot a phishing attempt by noticing the extremely bad grammar of a “foreign prince.” This makes it even more important to approach every communication with caution and professional skepticism, regardless of how authentic it appears. When faced with unexpected requests or messages that feel off, take extra steps to verify their legitimacy, such as contacting the sender directly using a known phone number or email address, rather than directly replying to the suspicious message.

How to Protect Your Tax Data:

• Always scrutinize email addresses
• Avoid clicking suspicious links
• Never download unexpected attachments
• Be on the lookout for messages with high pressure tactics, especially those that indicate your account has been compromised and you must act immediately, as those are potentially just bad actors trying to scare you into falling for their trap. When in doubt, verify the sender’s identity through a trusted channel before responding.

2. Secure Your Devices and Networks

Whether you’re working from the office, home or on the go, consider the security of your devices and network. From passwords to public connections, think before you open documents with sensitive information.

How to Protect Your Tax Data:

• Ensure all devices used to access tax documents are protected with updated antivirus software, strong passwords and the latest security patches.
• Avoid unsecured public Wi-Fi connections and publicly shared peripherals, such as USB chargers, as they could be compromised.
• When accessing sensitive information, such as W-2s, K-1s or prior year returns remotely, always use a virtual private network (VPN) for an added layer of protection.

3. Practice Good Password Hygiene

Tax season is a great time to review your password practices. Don’t make a bad actor’s life easier by using the same password across multiple accounts — and simply changing the number at the end isn’t really making the passwords unique.

How to Protect Your Tax Data:

• Use unique, complex passwords for each of your financial and tax-related accounts.
• Consider employing a reputable password manager to generate and store credentials securely.
• Enable multi-factor authentication (MFA) wherever available, making it much harder for cybercriminals to gain access to your accounts, even if they somehow obtain your account password.

4. Monitor Account Activity for Suspicious Behavior

During tax season, it's especially crucial to regularly review your financial accounts, email inboxes and any platforms used for tax documentation for unusual activity. Proactive monitoring may be the difference between stopping a bad actor and spending months trying to recover from the impact of their illicit actions.

How to Protect Your Tax Data:

• Set up alerts for login attempts, password changes or transfers you did not initiate. Many financial institutions and accounting platforms offer real-time notifications, making it easier to spot unauthorized access early.
• If you notice anything out of the ordinary, report it immediately to the institution and the authorities, and take steps to secure your accounts.

5. Stay Informed and Educate Your Team

Threats evolve quickly, and so should your defenses. Information security is a team sport, not just an IT issue. When everyone in your organization is aware and engaged, you significantly reduce your overall risk.

How to Protect Your Tax Data:

• Regularly update yourself, your staff, and even your family on the latest scams and security best practices.
• Ensure your business’ security program includes regular reviews of its policies and procedures.
• Make sure your staff know what to do in case of a security incident.

Tax season has enough stressors, but information security doesn’t need to be one of them. By staying vigilant, using the right tools and fostering a culture of awareness, you can ensure your sensitive data remains protected, allowing you to focus on what matters most: your business and your financial well-being. Stay safe out there!

Contact Kevin Sexton or a member of your service team to discuss this topic further.

In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.