WASHINGTON POST WARNS TAXPAYERS ABOUT FREE TAX RETURN PREPARATION SERVICES
While One Should Always be Cautious of Sharing Personal Information, “Tax Time” Always Calls for Increased Caution and Discretion
Everybody loves “free stuff.” Unless you are dealing with a philanthropist, are these free deals really free? According to Geoffrey Fowler in a March 7 article in the Washington Post, we are reminded that nothing is certain except death, taxes . . . and tech companies making grabs for your data.
Mr. Fowler’s article discussed the various “free” online tax services and why they are free. “How is somebody going to make money from this?” he asks. As Fowler so astutely stated, in Silicon Valley the adage is “If the product is free, that means you’re the product.”
He found that some vendors use the intimate details of the taxpayer’s tax returns to:
Bait you to purchase paid services. As examples, he mentioned that TurboTax and H&R Block offer limited free service to sell you more expensive paid services.
Sell you financial services. The data in your tax return is a gold mine. It allows vendors to determine how much you earn and are paying for your current mortgage. If you are wondering why you are being targeted by mortgage refinancing ads or solicitations from investment companies, your free tax return may be the reason.
Credit card solicitations. Some companies make money by showing you tailored “offers” for credit cards and loans based on a profile of your financial life.
Fowler stated that we’ve been letting free technology blind us to a really important question: When tax prep is free, you may be paying with your privacy. He states there’s a fine line between useful and creepy with surveillance. For some, such offers might be acceptable, even time- and money-saving. Fowler says that offers made by Credit Karma Tax are taking a business idea that hasn’t worked out well with Facebook and applying it to even more sensitive information . . . your personal financial information.
To really understand what free costs, you have to follow the data. Taped on Fowler’s desk are four questions he has learned to ask any business that wants his data:
1. What information is being used?
2. Who is it being shared with?
3. How secure is it?
4. How long are they holding on to it? If you use a service for a year, you tax information could be available “for sale” for several years. You need to read the fine print.
While credit bureaus and data brokers already collect information about your finances, some details are hard for that industry to come by, such as your cash flow, mortgage deduction and savings yield.
Remember that when using such free services, you are potentially putting your Social Security numbers at risk along with your address, employer’s name, address and EIN, dates of birth, and dependent children’s names. The IRS has gone to great lengths to redact much of this information in its transcripts system to prevent hackers from stealing your identity and preparing fraudulent income tax returns.
Data breach announcements by large companies appear to be becoming more common today. Using Willie Sutton’s quote as to why he robbed banks, “That’s where the money is.” Consider the potential consequences of voluntarily putting confidential information on the web.
If you would like to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
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About F. Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS licensed Enrolled Agent and who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA, which includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, Frazer, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, West Chester in Berks, Chester, Delaware, Montgomery and Philadelphia Counties, as well as clients in Delaware, New Jersey, New York and throughout the continental USA.
A Certified Tax Resolution Specialist, Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.