Technology Advisor Blog

Most small accounting firms are doing everything right for their clients and not enough to protect them. The work is careful, the relationships are built on trust, and the data being handled every day (Social Security numbers, bank accounts, years of financial records) is exactly what cybercriminals are looking for.

The IRS knows this too, which is why there are specific, written requirements for how tax professionals must protect that data. And most small firms are not fully meeting them.

What the IRS Actually Requires

Every tax professional who handles federal returns is required to have a written information security plan, known as a WISP. This is not a large firm requirement. It applies to every preparer, including a solo CPA working out of a home office.

The plan needs to cover how your firm collects and stores client data, who is responsible for protecting it, how you would respond if something went wrong, and how you are making sure any vendors you work with are handling data responsibly. The IRS released a template in 2022 to help smaller firms get started, but a generic document that never gets reviewed or updated does not satisfy the requirement. It needs to reflect how your firm actually operates.

Why Accounting Firms Are a Target

The data sitting inside a small accounting firm is extraordinarily valuable. Social Security numbers, tax IDs, income records, business financials going back years. Attackers are aware of this and they are also aware that small firms tend to have fewer protections in place than larger organizations, which makes them a more attractive target, not a less likely one.

The IRS reports thousands of data theft incidents involving tax professionals every year, and the firms that get hit are rarely the ones that thought they were at risk.

What Happens When Something Goes Wrong

A data breach at an accounting firm is not just an IT problem. It is a client trust problem, and in a business built entirely on that trust, the damage can be lasting in ways that are hard to recover from.

There are also legal obligations that kick in immediately. Depending on the nature of the breach and where your clients are located, you may be required to notify affected individuals, the IRS, and state tax authorities within a specific window of time. Firms that do not have a plan in place often find out about those obligations in the middle of trying to manage everything else at once.

What Actually Needs to Be in Place

Meeting the IRS requirements and genuinely protecting your firm point in the same direction, and the foundation looks the same for most small practices. A written security plan that gets reviewed annually. Access controls so employees only see the data they need. Multi-factor authentication on your tax software, email, and anything else that touches client information. Regular software updates across every device in the office. A backup process that has actually been tested. And a clear plan for what happens if something goes wrong, so nobody is figuring it out under pressure.

None of it needs to be complicated. It just needs to exist and be kept up to date.

How We Help Accounting Firms in Greater Boston

Ekaru works with accounting firms, law firms, medical practices, and professional services businesses across Westford, Acton, Chelmsford, Lowell, and greater Boston. We understand what it means to handle sensitive client data and what it actually takes to protect it, not just on paper but in the day-to-day reality of running a small firm.

If you are not confident your current setup meets IRS requirements, or if you have never had a proper security review, that is a straightforward conversation to have before something makes it urgent. Reach out and we will take a look.