Identity Theft: Are Your Tax Records Safe?

Tax Preparers Exposing Sensitive Information Stored on Unsecured Hard Drives

SHINGLE SPRINGS, Calif., Feb. 4 -- No single set of documents contains more sensitive data than do our tax returns. Names, addresses, social security numbers, employer and earnings information reside there along with information about how and where we invest and to whom we make charitable donations. Taken in their entirety, our tax returns offer a detailed picture of our personal and financial life. That's why many of us entrust this information only to a trained professional.

A tax preparer is, after all, bound by law and ethics to maintain their client's confidentiality. While they may carefully safeguard their paper and computer files, how many accounting professionals are even aware that their client's information may also exist on their copier's hard drive? Ask an accountant if he or she takes steps to periodically purge information from the unsecured drive on their copier. We would be pleasantly surprised to find even one who does!

Because of the proliferation of electronic filing and the need for centralized document management, the digital copier, or multi-function peripheral, is a key component in most accounting operations. They are used to scan, print, fax and copy tax records, often creating a recoverable copy of the entire document within the machine.

Digital Copier Security Inc., based in California, has tested hard drives from copiers previously used by accounting firms and has found thousands of individual tax return documents and other sensitive personal information. These hard drives were taken from machines that were headed for the resale market, with all of the sensitive data intact. "Most of these machines aren't destroyed" say John Juntunen, DCSI's Chief Operating Officer, "they are redeployed domestically or shipped to overseas markets." Bill Feigles, the company's Chief Executive Officer, adds "this data is often readily recoverable. Tax professionals must take the steps necessary to protect their clients and themselves." Most machines in service today are not equipped to effectively address data security issues and Tax Preparers may need the assistance of a professional to mitigate this threat.