Actaully no. No more than using ssh is sending your password over the net. Electronic filing uses a secure tcp/ip protocol.
If you do your tax filing over the web, it is done using secure network protocol. Actually, for HTTPS, I can check what encryption scheme is used (just click on the lock icon). If I don't like it, I can simply disconnect and do my taxes elswhere or using some other method. For net filing, I have no idea what they are using and how secure it is. I can only hope that they are using same encryption algorithm (for example 3DES or AES) as the ones used for HTTPS protocol. That would mean net filing has exactly the same security as HTTPS. If they are using some propriatory protocol (instead of the standard ones), I'd stay clear from net filing and use good old paper and pen. All propriatory protocols in history of mankind have proven to be trivial to brake.
Even if you do it all on your PC, your information is going to be stored on two networked computers. Your desktop PC running Windows will be one of them. And we all know how secure is desktop PC. Once you transfer it over, it is going to exist for some amount of time on another networked computer. Your government's tax agency computer.
The only good reason against doing taxes over the web is that you trust third party (privatly owned entity) with your private data. But on the other hand, as soon as you hire some agency and/or accountant to do your taxes, you are doing basically the same thing. As long as you live in country with sufficient legal regulations that requires anybody doing taxes (including over the web) to protect your privacy, you should be fine.
Have in mind that braking into your desktop PC is almost zero-risk thing. There'll probably be no consequences for attacker even in unlikely case that he is detected. You do not have sufficient funds to do much about it. Your funds are barely enough to set up basic defenses for that matter. On the other hand breaking into accounting company's computers or government computers is completely different story. They have funds to hunt down the attacker. Unlike you, they have funds to create secure environment. If I have to keep my confidential data anywhere, the last place I'd like to see them stored is desktop Windows machine.
-- Aleksandar Milivojevic <amilivojevic@xxxxxx> Pollard Banknote Limited Systems Administrator 1499 Buffalo Place Tel: (204) 474-2323 ext 276 Winnipeg, MB R3T 1L7
