The use (and possible misuse) of your personal information has to do with the fine print in the TOS you click-and-agree-to on the web-based tax software, the TOS in the PC/Mac version you click and install or the agreement you sign with the hard-copy tax preparer at their office.
In those agreements, each website or company will make their privacy policies clear as to what they can do with your return and how they protect your financial information in their software, on their webservers or in their office, and who they share with, and how they may use or distribute your information to other companies. In an example, from the H&R Block website:
We do not sell or rent your information without your consent. We may,
however, share your information with your consent or as permitted by
law. http://www.hrblock.com/universal/digital-online-mobile-privacy-principles.html
They will also assure you to the best of their ability that your information is safe. But they clearly release themselves from liability due to information loss from different scenarios. In the same TOS, from the H&R Block website:
We follow generally accepted standards to protect information
submitted to us, both during transmission and once we receive it.
Nevertheless, no method of transmission over the Internet, or method
of electronic storage, is 100% secure. Therefore, we cannot guarantee
its absolute security.
We maintain physical, electronic and procedural safeguards that comply
with applicable law and federal standards and that are designed to
restrict access to your information. These safeguards include programs
and specifications for physical security and records retention and
disposal; computer and communication security measures reflected in
system design, password protection, and data management practices; and
other measures to restrict access to the data we hold in physical and
electronic forms. http://www.hrblock.com/universal/digital-online-mobile-privacy-principles.html
And, the federal laws that govern information sharing and security are outlined in a linked TOS:
Tax return information that H&R Block collects from you is controlled
by Section 7216 of the Internal Revenue Code, the Gramm Leach Bliley
Act of 1999, certain other laws, and H&R Block policies.
http://www.hrblock.com/iphone/privacy.html
There are no firm guarantees when using a commercial tax preparer or webservice. They adhere to current laws and technologies, and realize that any breaches will negatively impact their business. Even with the IRS there are no guarantees; check the recent news for stories of the IRS losing personal information due to hacks, not fully verifying returns due to identity theft, and on and on. Things happen. Caveat Emptor.
Company privacy policies are so vague as to be useless. I'm more
interested in solid legal protections than any vague guidance the tax
prep [software] company may provide...
Company policies are all anyone gets in this world. They seem vague because there are no absolute protections. There are laws to follow in terms of information sharing and security, but that's as far as they can go, and as far as your protections go, too.
If you suffer damages from a company - either from a web security breach or a rogue grandma working in an office - your recourse is legal in nature, i.e. talk to a lawyer and take them to court.
