Data Security Plan for Tax Preparers: What You Need to Know

Clients trust tax professionals with some of their most sensitive personal and financial information. That trust comes with responsibility and increasingly, with legal requirements.

Creating a strong data security plan isn’t just about avoiding cyber threats. It’s about protecting your clients, staying compliant with IRS and FTC regulations, and ensuring your practice is built to last.

Cyberattacks targeting tax professionals have grown in frequency and sophistication. The IRS and FTC have responded with updated regulations that require tax preparers—no matter the size of the firm–to implement written data security plans.

But for many small and mid-sized firms, the concept of a Written Information Security Plan (WISP) can feel overwhelming. Where do you start? What’s actually required? And how do you keep things secure without disrupting your day-to-day workflow?

This guide breaks it all down. You’ll learn what a data security plan includes, how to meet IRS expectations, and how platforms like Suralink help tax professionals simplify compliance while protecting sensitive client information.

Why Data Security Matters in Tax Practice

Every tax preparer handles sensitive client data—from Social Security numbers to income details on a W-2 to business financials. That makes your firm a target. And with cloud storage, remote work, and digital document sharing now standard, even small vulnerabilities can lead to big consequences.

Consider the impact of:

• Phishing emails that trick staff into giving up credentials
• Malware or ransomware attacks that lock your files until a fee is paid
• Unauthorized access to shared drives or email accounts
• Simple mistakes like sending documents to the wrong person

In 2023, the IRS reminded tax professionals that they are legally obligated to have a data security plan under Publication 4557, and to follow the FTC’s Safeguards Rule under the Gramm-Leach-Bliley Act (GLBA).

This isn’t just about compliance—it’s about maintaining client trust and protecting your reputation.

What Is a Data Security Plan?

A Data Security Plan (also known as a Written Information Security Plan or WISP) is a formal document outlining how your firm protects client data. It includes risk assessments, technical safeguards, access controls, training protocols, and incident response procedures.

IRS Publication 4557 outlines the key areas tax professionals need to cover, including:

• Employee management and training
• Information systems (software, hardware, and access)
• Detection and management of unauthorized access
• Data backup and recovery
• Physical security of computers and storage devices

In short, your WISP should explain how your firm protects taxpayer data—and how you respond if that protection fails.

Common Cybersecurity Threats Facing Tax Professionals

Understanding the risks helps you plan more effectively. Here are some of the most common threats firms face today: 

Phishing Attacks

Fake emails or websites that trick users into revealing sensitive login credentials.

Ransomware

Malware that encrypts your files and demands payment to restore access.

Unauthorized Access

Cloud services, email accounts, or shared drives without proper permissions in place can expose client data.

Insider Risk or Human Error

Unintentional mistakes by employees, like misaddressed emails or mishandled USB drives can lead to breaches.

Weak Password Policies

Shared credentials, outdated passwords, or lack of multi-factor authentication (MFA) open the door for attackers.

Key Components of a Tax Data Security Plan

Creating a strong WISP doesn’t have to be complicated, but it does need to be thoughtful and documented. Here’s what to include:

1. Risk Assessment

Identify where and how your firm stores, transmits, and accesses client data. Where are the vulnerabilities?

2. Employee Training

Educate staff on phishing prevention, secure password use, and safe file-sharing practices. Make training part of onboarding and ongoing development.

3. Access Controls

Only authorized personnel should access sensitive data. Use role-based permissions and strong password policies.

4. Data Encryption

Encrypt client files both at rest and in transit to protect against interception or theft.

5. Software & Systems Security

Install antivirus software, use firewalls, and keep all systems up to date with the latest patches.

6. Multi-Factor Authentication (MFA)

Require a second step to log in. Like a code from your phone after entering your password to protect access to sensitive data.

7. Backup and Recovery

Automated, encrypted backups ensure you can recover data in the event of a breach or loss.

8. Incident Response Plan

Document your steps in the event of a breach—including who to notify, how to contain the issue, and how to report it to the IRS or FTC.

9. Physical Device Security

Laptops, USB drives, and paper documents should be stored securely when not in use.

Steps to Create a Data Security Plan

Even if you don’t have a large IT team, you can still take meaningful steps toward compliance:

1. Review IRS Publication 4557: It includes a detailed checklist to get started.
2. Conduct a basic risk assessment: Identify weak points in your tech and team processes.
3. Document your systems and policies: Write down how you currently protect data.
4. Create formal training guidelines: Educate all staff on safe practices.
5. Build an incident response plan: Know what you’ll do in case of a breach.
6. Review and update annually: Make this part of your year-end checklist.

You don’t have to do it all at once. Start where you are and improve over time.

Tools to Support Data Security Compliance

Technology alone won’t protect you, but the right tools make compliance easier and more reliable. Here are a few must-haves for modern tax practices:

• Encrypted document sharing platforms
• Client collaboration portals
• Role-based access control
• MFA for all user logins
• Automated backups with version history
• Audit trails that show who accessed what and when

These tools don’t just support compliance, they also reduce your manual workload and improve the client experience.

How Suralink Helps Tax Professionals Stay Compliant

Suralink is built for secure document collaboration. For tax professionals, it provides a structured, compliant way to manage sensitive client files without relying on email or disorganized shared drives.

Here’s how Suralink helps:

• End-to-end encryption: Every document is protected in transit and at rest.
• Role-based permissions: Control who can see or upload specific files.
• Built-in audit trails: Automatically log access, uploads, and comments.
• Secure communication: Ditch unsecured emails in favor of one centralized platform.
• Compliance support: Helps meet IRS and FTC guidelines around secure file exchange and data access controls.

Whether you’re managing hundreds of clients or a handful, Suralink keeps your document workflows secure and auditable—without adding complexity.

Best Practices to Maintain Data Security Year-Round

Once your plan is in place, keeping it active and effective is just as important. Here’s how to stay on track:

• Train new hires immediately
• Revisit your plan annually (or sooner if systems change)
• Keep software up to date
• Monitor system access regularly
• Limit access to only what’s necessary
• Test your incident response plan at least once a year

Cybersecurity is an ongoing effort, not a one-time task. But it’s manageable with the right habits and tools in place.

Build Trust with a Secure Tax Practice

A strong data security plan isn’t just about checking boxes for the IRS. It’s about building trust with your clients, reducing the risk of costly incidents, and creating a firm foundation for your practice.

Whether you’re just starting your WISP or looking to strengthen what you already have, tools like Suralink can help simplify the process.

If you want to see how Suralink supports secure, compliant document exchange for tax professionals, request a demo to learn more.