Annual IRS Compliance for Tax Preparers: Renew Your PTIN and Complete a Written Information Security Plan (WISP)

Comprehensive Guide to IRS and Federal Mandates for Tax Professionals: Building a Written Information Security Plan (WISP)

Tax professionals are subject to a wide range of IRS publications, federal guidelines, and data security mandates to protect sensitive client information and ensure compliance. At the core of these requirements is the creation of a Written Information Security Plan (WISP)—a critical document designed to safeguard data using administrative, physical, and technical measures. Below is a detailed outline of the key publications and regulations that emphasize the importance of a WISP and guide tax professionals in meeting these obligations.

IRS Publication 1345: Authorized IRS e-file Providers of Individual Income Tax Returns

This publication outlines the operational and security requirements for IRS e-file providers. It mandates proper procedures for data transmission, authentication protocols, and electronic signature compliance, reinforcing the need for robust data security practices within the WISP framework.

IRS Publication 5709: WISP Summary

IRS Publication 5709 offers a concise guide to creating and maintaining a WISP. It highlights the essential steps for tax preparers to assess risks, establish safeguards, and address potential vulnerabilities in their data environments, ensuring compliance with federal regulations.

IRS Publication 5708: WISP Sample Plan

This publication provides a sample Written Information Security Plan tailored to tax professionals. It includes templates and actionable strategies for securing taxpayer data, from risk assessments to breach response protocols, making it an indispensable tool for compliance.

IRS Publication 4557: Safeguarding Taxpayer Data

Publication 4557 serves as a comprehensive guide to safeguarding taxpayer information. It outlines best practices for protecting data, including encryption, secure storage, and proper disposal methods, all of which are vital components of a WISP.

IRS Publication 5293: Protect Your Clients; Protect Yourself

Focusing on cyber threats, this publication emphasizes the importance of implementing strong security measures to protect client data. It aligns with the WISP’s objective of mitigating risks through proactive data security strategies.

Federal Government and Industry Standards

FTC Data Breach Response Guide

This guide provides a detailed framework for responding to data breaches, including containment, assessment, and notification procedures. Incorporating these practices into the WISP ensures tax professionals are prepared to address security incidents effectively.

FTC on Privacy

The Federal Trade Commission’s privacy guidelines focus on protecting consumer data and complying with privacy laws. Tax professionals must align their WISP with these standards to safeguard sensitive client information.

GLBA (Gramm-Leach-Bliley Act)

The GLBA mandates financial institutions, including tax preparers, to implement safeguards for client information. Its requirements are foundational to the administrative, physical, and technical safeguards outlined in a WISP.

FTC Safeguards Rule

This rule enforces the implementation of comprehensive data protection measures, requiring tax professionals to develop and maintain a WISP that addresses risks and ensures compliance with the law.

Key Compliance Tools and Additional Regulations

Records Retention

Federal and IRS guidelines on records retention dictate secure storage and proper disposal of client records. A WISP must include policies for managing records to avoid unauthorized access or breaches.

HIPAA Security Rule

For tax professionals handling health-related financial data, the HIPAA Security Rule mandates the protection of electronic health information. Integrating these protocols into the WISP ensures compliance with both tax and health data regulations.

The Role of a WISP in Compliance and Data Security

A comprehensive Written Information Security Plan (WISP) is central to complying with these IRS mandates and federal regulations. By including administrative controls like employee training, physical safeguards such as secure file storage, and technical measures like encryption and access controls, a WISP provides a systematic approach to protecting taxpayer data.

Tax professionals who align their practices with these publications and federal guidelines demonstrate a commitment to data security and regulatory compliance. This not only reduces the risk of breaches and penalties but also builds trust with clients by prioritizing the confidentiality and integrity of their information.