IRS Statement on storing tax information on personal computers
The Internal Revenue Service is bound by law to protect the privacy of tax return information and meeting that responsibility takes the highest priority at the agency. No information transmitted through IRS e-file has ever been compromised.
IRS e-file systems engage a variety of security features, and IRS is always closely monitoring these systems to prevent unauthorized access to them. Each year, IRS e-file systems are certified by an independent external security certification company and are subject to audits by the Government Accountability Office as well as the Treasury Inspector General for Tax Administration.
Be aware however, taxpayers cannot file directly to IRS - all returns filed on web sites or from home computers using packaged software must go through an IRS authorized third party transmitter.
However, people should treat all personal tax and financial information carefully, whether the records are on paper or in an electronic format on their personal computers.
The IRS advises all taxpayers to protect their copies of their tax returns, and other sensitive financial data. At the very least, taxpayers who use a computer to do their taxes should consider keeping their financial information, such as their tax returns, in a different folder than the files they want to share and should restrict the shareware to the appropriate folder, at setup.
The Federal Trade Commission has published advice concerning steps users may wish to take to protect themselves. The article is available from their web site at http://www.ftc.gov/bcp/conline/pubs/alerts/sharealrt.htm