Tax professionals are preparing for the 2024 tax season; be confident you are securing your client’s personal data.
Tax professionals must ensure client data is stored safely, physically, and electronically, following IRS Publication 4557 Safeguarding Taxpayer Data and other resources published by the agency.
Cybersecurity requires constant care and awareness in light of ever-evolving threats, which is why engaging the services of an MSP is such an effective strategy to lower security breach risks and safeguard sensitive data.
What Tax Professionals Need to Protect Their Client’s Data in Compliance with the IRS
Cybercriminals know that any tax professional, from the CEO of an accounting firm to solo practitioner offices, is vulnerable to cybercrime and poses a threat. Cybercriminals know that the more information they obtain about their client’s lives and finances from these professionals, the higher their chance of fraudulently filing fraudulent tax returns and their own returns. It is vital that all tax professionals – regardless of size, industry, or location – take measures to safeguard both themselves and their clients from potential cyber threats.
IRS has provided tax professionals with guidelines to implement protective measures and remain compliant with the law, but developing a data security plan may be daunting for some businesses as it involves understanding cyber threats and providing details on their current protection protocols.
Tax professionals looking to comply with Publication 4557 must also create and implement a communication policy and train their employees to recognize phishing attacks and other threats to customer data. Strong passwords on computers and other devices must be regularly changed, while sensitive client files should be stored securely in encrypted folders.
Small businesses may find the requirements of cybersecurity solutions daunting, yet managed IT service providers offer flexible, scalable solutions that help small businesses keep pace with evolving threats while protecting their reputation and customers’ privacy.
Why Hiring a Managed Service Provider (MSP) is Beneficial
Cybersecurity is an ongoing battle, pitting sophisticated hackers against each other to access client data and steal identity. The IRS is taking proactive steps to address this threat by implementing security measures designed to safeguard taxpayers and tax professionals against identity theft or other cybercrimes.
CPAs and tax preparers guard their clients’ most prized possessions – their money. Therefore, CPAs and tax practitioners can become easy targets for thieves looking to access personal financial data that could enable fraudulent returns and refund theft. According to the IRS, approximately three to five tax practitioners are targeted weekly.
Thieves often employ email phishing attacks to persuade tax professionals into clicking links or opening attachments in phishing emails sent by criminals, often leading them to install software onto their computers that can give thieves remote access to files held on it.
As tax season is when more information is shared online than usual, cybercriminals increase their efforts to target tax professionals and their clients.
There are a few simple steps you can take to protect sensitive data, including:
Benefits of MSPs
Every day, tax professionals receive emails or texts tempting them to click on links or respond in ways that could install malware onto their computers, networks, and/or phones – an act known as “phishing.” Phishing is one of the leading causes of data breaches, which could result in stolen personal information being obtained illegally and fraudulent tax returns being filed, with refunds going straight into criminals’ accounts. Therefore, it’s essential that tax professionals recognize phishing scams quickly to educate their staff to prevent these breaches and safeguard themselves and their clients against such potential scams as soon as possible to safeguard themselves and protect themselves and protect clients.
IRS and state tax agencies continue their battle against identity theft, yet thieves continue evolving strategies against it. One strategy involves using real client data instead of stolen, making it more difficult for tax officials to detect and stop fraudulent return submissions. Cybercriminals have also begun selling basic tax preparer and taxpayer information on the black market so others may file fraudulent returns with stolen data.
MSPs offer tax firms a great way to ward off these threats. Not only can they save the in-house team time by serving as a liaison between themselves and technology vendors, but they are also equipped with deep knowledge about business operations and an understanding of cybersecurity threats and can anticipate breaches before they occur, saving even more time for clients.
How to Choose a MSP
When selecting a Managed Service Provider (MSP), ensure they specialize in your industry and have extensive experience working with businesses of your size. This will help them understand your unique IT requirements and challenges, such as managed security services and disaster recovery plans. Ask about solutions offered, such as managed security services and disaster recovery plans, and ensure their Service Level Agreement includes clear responsibilities, guarantees, and performance standards.
As part of your assessment of an MSP’s capabilities, customer references are an ideal way to understand their performance, responsiveness, and customer service capabilities. You should also ask whether their services can scale as your business changes.
Tax ID theft occurs when hackers utilize your personal information to file taxes or collect refunds under your name. They could access it by breaching financial institutions (banks, credit cards, loans, and investments), medical facilities (hospitals, doctor and dentist offices), or business-related organizations such as utility providers.
To protect against fraud and identity theft, it’s wise to take proactive measures in defending your personal data. For example, shredding or destroying physical and electronic documents with confidential data, making passwords strong, and not sharing personal details on social media websites or other online channels.
Hire YellahMSP as your service provider. Our remote monitoring and management services help keep your systems running smoothly and safely and ensure they specialize in your industry and have extensive experience working with businesses of all sizes.