Tax Season & Cybersecurity: What agents and business owners need to know
Tax season is one of the busiest times of year for businesses—and one of the most active seasons for cybercriminals.
For business owners, it means transmitting highly sensitive financial and employee data.
For insurance agents, it presents a critical opportunity to protect clients from one of the most preventable (yet costly) exposures.
Cyber threats spike during tax season because attackers know:
• Businesses are exchanging payroll and W-2 information
• Financial documents are moving quickly
• Urgency is high
• Employees are more likely to click without verifying
For agents, this is more than awareness—it’s a proactive coverage conversation waiting to happen.
Why Tax Season Is a Prime Target
During tax season, businesses routinely:
• Send W-2 and 1099 data to accountants
• Share employee Social Security numbers
• Transfer funds for tax payments
• Log into payroll and accounting platforms
• Process refunds
That concentration of sensitive data creates opportunity for:
• Phishing emails impersonating the IRS or a CPA
• Social engineering scams requesting payroll records
• Funds transfer fraud
• Ransomware attacks
• Identity theft using stolen EINs
And here’s the reality: many customers don’t view these as insurance exposures—until after the loss.
Before Filing: How Agents Can Help Customers Reduce Risk
Tax season is the perfect time for a proactive check-in.
Conversation Starters for Agents:
• “Who has access to your payroll and tax documents?”
• “Do you require multi-factor authentication on your accounting systems?”
• “If someone impersonated your CPA and requested a wire transfer, would you be covered?”
• “Does your cyber policy include social engineering and funds transfer fraud?”
These questions do two things:
1. They uncover gaps.
2. They position you as a risk advisor—not just a policy provider.
Key Risk Prevention Steps to Share with Customers
Encourage business owners to:
1. Use Verified Platforms Only
• Access IRS.gov directly (never through email links)
• Confirm CPA domains before sending sensitive files
• Avoid public Wi-Fi when transmitting tax documents
2. Enable Multi-Factor Authentication (MFA)
MFA dramatically reduces credential theft—especially for:
• Payroll platforms
• Accounting software
• Email accounts
• Banking portals
3. Implement call-back verification for wire transfers
• Funds transfer fraud is common during tax season.
• Require verbal confirmation through a known phone number before initiating payment.
4. Conduct a phishing reminder with staff
• A simple internal email reminding employees to look out for suspicious subject lines or confusing sentences can prevent thousands in losses.
Agents who provide this guidance are more likely to uncover cyber coverage opportunities naturally.
After Filing: Ongoing Monitoring Matters
Risk doesn’t disappear once taxes are submitted.
Encourage customers to watch for:
• Duplicate tax filing notifications
• Refunds they did not request
• IRS transcripts showing unfamiliar activity
• Vendor emails requesting updated payment details
These red flags may indicate identity theft or account compromise.
As an agent, a post-filing check-in email reinforces your value and keeps cyber top-of-mind.
If a customer falls victim to a cyber threat
Even well-prepared businesses can experience an incident. What matters most is response.
Immediate Steps:
1. Stop communication with the suspected attacker
2. Notify IT to isolate affected systems
3. Preserve emails and digital evidence
4. Report IRS-related fraud immediately
5. Contact the insurance carrier
This is where cyber coverage becomes critical.
What Cyber Coverage Can Provide
A strong cyber policy may offer:
• Incident response teams
• Forensic investigation
• Legal counsel
• Regulatory guidance
• Notification and credit monitoring
• Public relations support
• Funds transfer fraud coverage
• Business interruption protection
• Ransomware negotiation and payment support
Without cyber coverage, these services must be paid out of pocket—and response delays often increase the total loss.
For agents, this is an opportunity to shift the conversation from price to protection.
Why This Matters for Agents
Tax season is not just an operational event—it’s a risk exposure window.
Instead of waiting for renewal, agents can use this season to:
• Review cyber limits
• Confirm social engineering endorsements
• Cross-sell cyber to P&C clients
• Position cyber as part of a 360° risk strategy
• Strengthen relationships through proactive outreach
The agents who lead with education—especially when it comes to seasonal exposures—become long-term, trusted advisors.
Protect Your Customers Before a Claim Happens
Whether you’re a business owner reviewing your internal safeguards or an agent advising your customers, now is the time to assess cyber readiness.
Connect with a LocalEdge broker to review cyber coverage options and ensure your customers are protected—during tax season and beyond.
Call us at 800.444.1744, Option 1, then 4. Or email at [email protected]