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Analysis Of Electronic Tax Filing By State Highlights The Threat Of Cybercrime To Taxpayers And Small Businesses

Written by Ken Gaebler
Published: 2/7/2013

With more and more business owners e-filing their tax returns, ThreatMetrix offers several tips to help keep you and your company safe from cybercrime this tax season.

Over the next few months, many small business owners will find themselves at the intersection of two growing trends when filing for tax time: e-filing and cybercrime. Although most entrepreneurs are generally aware of the threat of cybercrime, the targeting of e-filed tax returns is a relatively new phenomenon that exploits taxpayers' growing preference for electronic income tax filing.

1040 Electronic Tax Filing - Cybercrime Security Threats

Taxpayers and business owners across the nation are increasingly taking advantage e-filing to streamline both the filing and payment process. A state-by-state analysis of e-filing rates, conducted by Threatmetrix, a provider of cybercrime prevention solutions, demonstrates how pervasive e-filing has become -- and how many taxpayers are vulnerable to online criminal activities.

State Rankings for e-Filing Adoption
(Covers Forms 1040, 1040-A, and 1040-EZ. Data analysis and state rankings by ThreatMetrix; Raw data estimates provided by IRS Office of Research.)

  • #1. Iowa (90% e-filing rate: 1,295,700 electronic vs. 151,800 paper)
  • #2. Nebraska (88% e-filing rate: 779,700 electronic vs. 107,800 paper)
  • #3. Kansas (87% e-filing rate: 1,180,700 electronic vs. 171,400 paper)
  • #4. Montana (86% e-filing rate: 414,400 electronic vs. 68,400 paper)
  • #5. Minnesota (86% e-filing rate: 2,245,100 electronic vs. 374,100 paper)
  • #6. Indiana (85% e-filing rate: 2,630,300 electronic vs. 451,800 paper)
  • #7. Idaho (85% e-filing rate: 576,700 electronic vs. 99,200 paper)
  • #8. Kentucky (85% e-filing rate: 1,631,500 electronic vs. 285,600 paper)
  • #9. South Dakota (85% e-filing rate: 352,100 electronic vs. 61,700 paper)
  • #10. Arkansas (85% e-filing rate: 1,073,000 electronic vs. 190,100 paper)
  • #11. South Carolina (85% e-filing rate: 1,790,400 electronic vs. 323,100 paper)
  • #12. Wisconsin (84% e-filing rate: 2,398,600 electronic vs. 440,100 paper)
  • #13. North Dakota (84% e-filing rate: 292,300 electronic vs. 54,100 paper)
  • #14. Utah (84% e-filing rate: 982,600 electronic vs. 183,500 paper)
  • #15. Oklahoma (84% e-filing rate: 1,380,300 electronic vs. 263,800 paper)
  • #16. Michigan (84% e-filing rate: 4,003,900 electronic vs. 767,200 paper)
  • #17. Missouri (84% e-filing rate: 2,319,100 electronic vs. 448,100 paper)
  • #18. Alabama (84% e-filing rate: 1,802,000 electronic vs. 353,100 paper)
  • #19. Georgia (83% e-filing rate: 3,806,100 electronic vs. 771,900 paper)
  • #20. Wyoming (83% e-filing rate: 239,400 electronic vs. 48,800 paper)
  • #21. Mississippi (83% e-filing rate: 1,108,200 electronic vs. 230,600 paper)
  • #22. Tennessee (83% e-filing rate: 2,437,400 electronic vs. 510,300 paper)
  • #23. North Carolina (82% e-filing rate: 3,554,100 electronic vs. 779,700 paper)
  • #24. Rhode Island (82% e-filing rate: 431,400 electronic vs. 94,800 paper)
  • #25. Massachusetts (82% e-filing rate: 2,677,300 electronic vs. 593,800 paper)
  • #26. Connecticut (82% e-filing rate: 1,438,500 electronic vs. 319,400 paper)
  • #27. West Virginia (82% e-filing rate: 659,200 electronic vs. 146,500 paper)
  • #28. Ohio (82% e-filing rate: 4,620,100 electronic vs. 1,030,100 paper)
  • #29. Alaska (81% e-filing rate: 310,100 electronic vs. 71,200 paper)
  • #30. Washington (81% e-filing rate: 2,619,600 electronic vs. 602,500 paper)
  • #31. Oregon (81% e-filing rate: 1,438,400 electronic vs. 334,700 paper)
  • #32. New Mexico (81% e-filing rate: 754,300 electronic vs. 180,400 paper)
  • #33. Delaware (81% e-filing rate: 353,500 electronic vs. 84,700 paper)
  • #34. New York (81% e-filing rate: 7,766,300 electronic vs. 1,871,200 paper)
  • #35. Vermont (80% e-filing rate: 260,300 electronic vs. 63,100 paper)
  • #36. Virginia (80% e-filing rate: 3,068,700 electronic vs. 746,100 paper)
  • #37. Florida (80% e-filing rate: 7,976,000 electronic vs. 1,939,500 paper)
  • #38. Louisiana (80% e-filing rate: 1,666,400 electronic vs. 407,200 paper)
  • #39. New Hampshire (80% e-filing rate: 546,100 electronic vs. 135,000 paper)
  • #40. Illinois (80% e-filing rate: 4,970,400 electronic vs. 1,252,700 paper)
  • #41. Pennsylvania (80% e-filing rate: 4,988,400 electronic vs. 1,276,100 paper)
  • #42. New Jersey (79% e-filing rate: 3,463,900 electronic vs. 909,100 paper)
  • #43. Colorado (79% e-filing rate: 1,908,300 electronic vs. 517,400 paper)
  • #44. Nevada (79% e-filing rate: 1,027,400 electronic vs. 279,000 paper)
  • #45. Arizona (78% e-filing rate: 2,192,400 electronic vs. 603,900 paper)
  • #46. California (78% e-filing rate: 13,362,900 electronic vs. 3,760,400 paper)
  • #47. Maine (77% e-filing rate: 497,600 electronic vs. 147,400 paper)
  • #48. Maryland (76% e-filing rate: 2,161,100 electronic vs. 688,800 paper)
  • #49. District of Columbia (74% e-filing rate: 246,900 electronic vs. 85,300 paper)
  • #50. Texas (72% e-filing rate: 8,923,200 electronic vs. 2,591,200 paper)
  • #51. Hawaii (72% e-filing rate: 479,600 electronic vs. 188,700 paper)

Ways to Avoid Tax-Related Cybercrime When e-Filing Taxes

Threatmetrix has identified several precautions e-filers can take to help protect their accounts and information this tax season.

  • Prioritize Security. The first step in protecting your information is to select a tax preparation service or website that offers bank-level security, with two-factor authentication and anti-malware protection.
  • Watch the Address Bar. Any web form you submit must be HTTP secure. If there is an "s" found after "http" in the site address or there is a padlock icon to the left of the web address, you're probably safe. But it's also a good idea to monitor the address of each page to confirm that it is a valid IRS or tax preparation site.
  • Avoid Suspicious Emails and Pop-Ups. If you receive a suspicious email or pop-up in the middle of the filing process, it's could be a cyber crook "phishing" for personal information. In many cases, these requests appear authentic, so you'll need to be diligent about not responding or providing information via a pop-up or link in an email.
  • Protect Your Password. Don't use the same password on your tax preparation website that you use for other accounts. A single breach of security can have a cascade effect and compromise sensitive information contained in your return.
  • Update Devices. It's possible that your computer already contains malware designed to exploit information from your e-filed return. By updating anti-virus and malware detection software before you get started, you can inoculate your system and prevent crooks from intercepting your data.

 

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