As an accounting firm, securing sensitive client information is not only an essential component of running your business, but it’s also a federal requirement.
Protecting taxpayer information is a priority for the IRS. As a priority project, they released new federal regulations and guidelines tax professionals must comply with.
This post outlines the six things your accounting firm must know to comply with IRS safeguards and protect sensitive client and business information with ease, including:
Since its inception in 2015, the IRS’s Security Summit has brought together state agencies and private-sector industry experts to create cyber security work groups to identify and establish security requirements for tax professionals.
The Security Summit routinely publishes guides and other helpful resources to help tax professionals understand and adequately meet federal regulatory requirements.
One of the first requirements your accounting firm should be aware of is the Gramm-Leach-Bliley (GLB) Act. The GLB act requires financial institutions like your accounting firm to maintain the security and confidentiality of financial information. The GLB Act triggered the creation of the Federal Trade Commission’s (FTC) Safeguards Rule. According to this rule, accounting firms must create and implement written information security plans to safeguard sensitive taxpayer information. Failure to comply with these regulations may result in agency investigation.
The first step is ensuring your accounting team is familiar with the Safeguards Rule and understands the importance of complying with the outlined requirements. Read the IRS Security Summit’s published a guide titled “Safeguarding Taxpayer Data: A Guide For Your Business” for a detailed approach to this process.
As you work through the Safeguards Rule, you’ll notice that a robust implementation plan is one of the first steps your accounting firm should take in order to meet the FTC and IRS compliance requirements.
An implementation plan for your accounting firm may look like this:
Once you have a general understanding and detailed records of your current process for securing sensitive client data, your accounting firm can create a strategy for bridging gaps, increasing security, and enhancing internal data safeguards.
Your accounting firm’s next step in complying with IRS requirements is drafting a written data security plan.
As we recently outlined in another post, What is a Data Security Plan: 3 Steps to Create Yours Today, your data security plan must take into consideration your unique business attributes like size, type of services you deliver, and the nature of taxpayer data you collect.
Reviewing your internal control process is an additional step in complying with federal safeguarding requirements. Identify any gaps from the implementation plan you created and start to fill any gaps in your internal security process by considering the following:
Read through this post for more details on specific security steps you should take to protect your accounting firm and your client information safe.
It’s not enough to simply create a written data security plan if you want your accounting firm to comply fully with the FTC and IRS requirements. Data theft is common, and remaining vigilant about how your accounting firm may experience a security breach is an essential component of IRS compliance.
Knowing what to be on the lookout for can help you monitor for suspicious activity, including:
Even the best-protected accounting firm systems can suffer from compromised security. Contact the IRS and your local law enforcement agency if you become aware of data loss or theft. The IRS will connect you with your local IRS liaison to help guide you through the necessary steps to mitigate any damage to your firm or client’s information. This stakeholder liaison will direct you to contact the FBI in certain circumstances.
In addition to contacting the IRS and other federal agency stakeholders, you must also inform the state where you prepare state returns. You can find this information through your local state attorney general or tax administration office.
Finally, if your accounting firm is the victim of a cybersecurity breach, contact an IT security expert like ABL Computers immediately. We’ll help you identify how the breach took place and how to prevent further security breaches in the future.
One of the most critical components to complying with IRS safeguarding requirements is ensuring all your employees understand why these safeguards are in place and how they can do their part to secure sensitive client data.
Make sure to engage your employees throughout the process of creating a written data security plan and any plans to bridge any gaps in your internal systems security process.
Educate your accounting team on the importance of updating and maintaining system security and defining good cybersecurity habits like frequent password changes, routine software updates, and maintaining client confidentiality.
Review the Employee Management and Training section of the IRS Safeguarding Taxpayer Data guide for a thorough checklist on hiring and training new accounting employees, and maintaining a robust management education program to help all team members comply with IRS data security requirements.
Complying with the IRS and other federal agency data security requirements requires a robust strategy and routine maintenance of all systems, hardware, and software your accounting firm relies on.
At ABL Computers, we understand how difficult it can be to comply with these requirements while running a successful accounting business. That’s why we offer our expert managed IT solutions service.
Our managed IT solutions service brings an expert cybersecurity and IT team in-house. We understand your unique business goals and tailor your data security package to fit your firm’s budget to easily comply with IRS regulations and protect your accounting firm without the hassle.
Helping you identify gaps in your internal security controls, guiding you as you write your data security plan, and creating long-term cybersecurity and IT maintenance strategy is what we do best.
Contact us today to ensure your accounting firm complies with federal regulations to secure sensitive client information.
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