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Cybersecurity Must Balance IT Security, Payroll Efficiency Needs

March 25, 2022, 10:22 PM

Cybersecurity in the payroll industry must strike a balance between improving IT security and maintaining payroll efficiency and privacy, a payroll professional said March 22.

“What is the user experience?” said Stephanie Salavejus, vice president and chief operating officer of PenSoft. “If I put in so many security protocols that you are unable to be efficient and productive in your day-to-day processing of payroll, what are you most likely going to do? You’re most likely going to abandon using that solution.”

Tax fraud accounts for 72% of all fraud so payroll professionals should be aware of ways to improve their cybersecurity systems, Salavejus added, speaking at the American Payroll Association’s Capital Summit.

“Cybersecurity criminals will continue to target not only the tax profession but the entire payroll industry,” she said.

Payroll professionals interested in cybersecurity protocol should go to the Information Sharing and Analysis Center website, she said. The website provides practical resources that payroll professionals can use, she said.

Payroll professionals should also participate in the National Tax Awareness Security Week and IRS awareness campaigns, Salavejus said. “Many of those campaigns provide a great foundation for educating not only your employees but your executives as to the role that they can play for improving the integrity of the tax system and payroll integrity and making sure the data is secure,” she said.

Privacy Risks

The Internal Revenue Service and the IT company ID.me recently partnered to verify identity documents through a three-step process, she said. One of those steps was facial recognition, Salavejus said.

Following complaints from civil liberties groups, U.S. Senator Ron Wyden (D) sent a letter to the IRS urging the Service to stop the use of facial recognition, Salavejus said. The IRS complied and now offers alternative methods of identity verification, she said.

However, facial recognition can be useful, she said. “I registered for ID.me during the facial identification component. I was not concerned about having to take a selfie. In fact, it provided the likeliness test. And that is one of the areas where we’re concerned. If we are merely just uploading a government document, how do I know [someone] isn’t going to be impersonating me because he has a copy of my document?”

Payroll professionals and government officials will need to collaborate to address cybersecurity privacy concerns as cybersecurity becomes more sophisticated, she said.

“The argument that the privacy risks are just too great needs to be addressed,” Salavejus said. “Where is all the data going? Where is it being stored? How long is the data being retained? What do they plan to do with the data, and is the information being sold or shared?”

The IRS is working with state agencies and tax software companies to develop new solutions to improve cybersecurity, she said.

“We are still only scratching the surface. We still have a substantial amount of work to do to even cut down on the fraud that’s being perpetuated,” she said.

To contact the reporter on this story: Emmanuel Elone in Washington at eelone@bloombergindustry.com

To contact the editor on this story: William Dunn at wdunn@bloombergindustry.com