Mastering IRS Security Requirements for Tax Preparers in 2025

In 2025, the tax preparation industry faces unprecedented cybersecurity challenges. With identity thieves and cybercriminals targeting sensitive taxpayer data, tax preparers must adhere to strict IRS security requirements to protect their clients and maintain compliance. According to recent statistics, tax-related identity theft has surged by 15% over the past year alone, making it critical for professional tax preparers to implement robust security measures. This article explores the IRS Security Requirements for Tax Preparers, offering actionable insights into safeguarding client data and ensuring ongoing compliance.

Understanding Written Information Security Plans (WISP)

A Written Information Security Plan (WISP) is a critical component of any tax preparer’s security infrastructure. The IRS mandates that all tax return preparers develop and maintain a WISP to protect sensitive client information. A WISP outlines the minimum information security requirements, including access control, data encryption, and incident response plans.

For sole practitioners or small accounting firms, creating a one-size-fits-all WISP can be challenging. However, resources like the “Taxes-Security-Together” Checklist provide essential steps to guide tax professionals in crafting a tailored security plan. These plans are not just legal requirements but also serve as a professional security component that builds trust with clients.

Tax preparers are legally obligated to comply with the Gramm-Leach-Bliley Act (GLBA), which requires financial institutions—including tax professionals—to protect consumer information. Additionally, the IRS Cyber Security Plan outlines specific standards for tax software and service providers, ensuring that third-party providers meet basic security requirements.

Failure to adhere to these legal mandates can result in severe consequences, including fines, loss of preparer tax identification numbers, and even criminal charges. For example, unauthorized access to taxpayer data or breaches of taxpayer information can lead to penalties exceeding $10,000 per incident.

Importance of Compliance

Compliance with IRS security recommendations is not optional—it’s a necessity. Professional organizations and associations emphasize that reasonable security practices are vital for protecting sensitive taxpayer information. Moreover, compliance aids with tax compliance checks and helps businesses from identity thieves seeking fraudulent returns.

The Security Summit, a public-private partnership between the IRS, tax industry partners, and state tax agencies, plays a pivotal role in promoting awareness campaigns and providing news releases on emerging threats. Their annual education effort, such as the three-day continuing education events held in San Diego, equips tax practitioners with the latest tools and strategies to combat cyber risks.

Consequences of Non-Compliance

Non-compliance with IRS security standards can have dire consequences. High-risk security incidents, such as phishing emails leading to data breaches, can expose sensitive client data and result in reputational damage. In 2024, over 40% of reported security incidents involved tax preparers who failed to implement multifactor authentication (MFA) or neglected regular risk assessments.

Furthermore, non-compliance may lead to exclusion from Authorized e-file Providers’ systems, impacting electronic tax return filing capabilities. To avoid these pitfalls, tax preparers should prioritize adherence to current security measures and stay updated on evolving security issues.

Security Protocols Overview

Implementing effective security protocols involves several layers of protection. From anti-malware/anti-virus security software to cloud storage providers, every aspect of a company network must be secured. Basic security steps include locking filing cabinets, using secure business email accounts, and ensuring all devices have the latest security patches.

Additionally, training staff on the basics of cybersecurity is crucial. An annual awareness campaign with reminders about phishing scams and safe email practices can significantly reduce the risk of security breaches.

Collaboration with IRS Stakeholder Liaison

Engaging with the IRS Stakeholder Liaison offers numerous benefits for tax preparers. These liaisons provide guidance on developing an emergency data theft plan and offer insights into best practices for communication during security incidents. By fostering collaboration, tax professionals can ensure they are equipped to handle threats effectively.

Benefits of Collaboration

Collaborating with industry partners enhances a tax preparer’s ability to respond to security incidents. Through partnerships with Tax Software Providers and regional firms, tax professionals gain access to shared resources and collective expertise. This collaborative approach strengthens the entire tax preparation industry against adept cybercriminals.

Communication Best Practices

Effective communication is key to maintaining client trust. Tax preparers should clearly explain their security policies and reassure clients that their data is protected. Regular updates via social media sites or newsletters can keep clients informed about new security applications and measures.

Proactive Security Measures

Proactive security measures involve more than just installing antivirus software. Implementing multifactor authentication (MFA) adds an extra layer of protection, reducing the risk of unauthorized access. MFA is now considered a standard measure of authentication across the tax industry.

What is MFA?

Multifactor authentication (MFA) requires users to verify their identity through multiple methods before accessing sensitive information. This could include something they know (password), something they have (smartphone app), or something they are (fingerprint).

Benefits of MFA

MFA drastically reduces the likelihood of successful cyberattacks. Studies show that businesses using MFA experience 99.9% fewer account compromises compared to those without it.

Developing an Emergency Data Theft Plan

An emergency data theft plan ensures readiness for potential threats. Steps include identifying critical assets, establishing roles for team members, and conducting regular drills. Backup software and locked filing cabinets are essential components of this plan.

Steps for Creating a Response Plan

  1. Assess vulnerabilities.
  2. Define roles and responsibilities.
  3. Develop a communication strategy.
  4. Test the plan regularly.

Ensuring Readiness for Threats

Regular risk assessments and employee training are vital for ensuring readiness. Tax preparers should conduct at least one assessment annually and update their WISP accordingly.

Resources for Tax Preparers

Numerous resources are available to assist tax preparers in meeting IRS security requirements:

  • Professional Organizations and Associations : Offer high-quality training and support.
  • Online Security Training Programs : Provide interactive modules on cybersecurity.
  • Government Resources and Guidelines : Include detailed checklists and legal frameworks.

Conclusion

In 2025, mastering IRS Security Requirements for Tax Preparers is no longer optional—it’s imperative. By understanding and implementing robust security measures, tax professionals can protect sensitive client data, comply with legal mandates, and build lasting trust with their clients. Whether through MFA, collaboration with stakeholders, or proactive risk management, staying ahead of cyber threats ensures long-term success in the ever-evolving tax preparation landscape.

Be sure to partner with a local trusted advisor who understands these new security requirements and prioritize security and compliance. Drop us a line to see if we are a good fit for your practice.