Today the CPA Dailey Letter (citing CBS News and the IRS) warned against phishing attacks on accounting firm computer networks resulting in stolen data and fraudulent tax returns. We helped an unfortunate client facing this problem last year. They merged in a smaller firm in the middle of busy season and didn’t get the small firm converted to the large firm’s computer system quickly enough. Imagine a hacker getting copies of all your clients’ 2016 returns and then using your clients’ data to file fraudulent 2017 returns seeking big refunds. You and your clients learn about the problem when notices start drifting in from the IRS rejecting returns that seek 7 figure refunds. Eventually you get such a notice for every one of your tax return clients. You have to call each and every one of them to tell them that fraudsters have all their personal information from the return. Fraudulent tax returns may just be the beginning of their identity theft problems. This problem could really ruin your quarter and your year. Keep your software updates current and do some simulated attacks to protect your clients and your firm.