Tax Security: Is Your Tax Software Keeping Your Client Information Safe?

Tim Sines

Does your CPA know there’s a legal requirement that mandates they must keep your tax information properly secured? You’d be surprised at the number of CPAs who don’t know this.

If you’re working with one, your personal tax data is at risk. On the other hand, if you are a CPA, it’s time to get informed on everything about tax security— including what tools you can use to automate the security process and let it work in the background for you.

In this guide, we’ll go over the security requirements for tax CPAs, what you can do to secure your client information, and what tools you can use to be proactive about securing your client’s data.

Let’s dive in.

What are the CPA tax security requirements?

The GBD, or Gramm-Leach-Bliley Act, requires businesses defined as financial institutions to secure the financial information they possess. This includes financial institutions in the tax industry. The FTC, or Federal Trade Commission, issued rules to help safeguard customer information.

The FTC also outlines that the security plan enacted by any tax business needs to be appropriate for the size of that business as well as its complexity. Share on X There are three particular areas the FTC focuses on where safety must be enforced. These are:

  • Information systems
  • Employee management and training
  • Managing system failures

We’ll dive into more detail on what you can do, particularly in the information systems area of your data security plan.

What you can do to secure your client information

So you know you have to have stringent measures in place to ensure you’re being compliant with FTC tax information safety rules. But how do you go about deploying an actual plan?

What should you pay attention to? How can you involve your employees? Here are a few pointers worth paying attention to:
Deploy technical security measures
As a CPA, you know that a lot of your client’s data will live online indefinitely. This is why the FTC recommends you deploy technical security measures by creating:

  • Firewalls
  • Antivirus
  • Multifactor authentication
  • Backups
  • VPNs
  • Encryption

Create a data security plan

One thing that’ll help your firm stay compliant and on top of security measures is to have one source of truth that both current staff and new members can easily access. This helps with employee training.

It also helps with communicating any security changes when and if you make them. As you change and update that single source of data, every team member can always stay informed on any changes they may need to be aware of.

This also saves you time as you improve your security efforts and fill everyone in on your progress.

Inform and educate staff

As mentioned previously, creating a centralized data security plan can be a key part of the puzzle when it comes to informing and educating your staff. What security measures should they be aware of?

How should they handle sensitive information? What should they do if a data breach happens? How should they handle suspicious emails from unknown or fishy email addresses? These are all questions your staff should be able to answer once they’re informed.

Increase awareness

With security, awareness is key. Staff members should be equipped with enough know-how to know when certain transactions look incorrect, or if there are signs that data has possibly been hacked. The more aware your staff is, the more they can prevent huge data breach issues that can possibly cost the firm a lot of money and legal headaches long-term.

Create a contingency plan

In case things were to go wrong, what should your team members do? What steps should they follow? Is there a checklist you can provide them with?

If you have an answer for each of these questions, you’re well on your way to creating a well-rounded contingency plan that your team members can follow in case of a data emergency.

Ensure your software comes with security features

These days, if you’re a CPA, you’re likely relying on a handful of software tools to help you get the job done. Gone are the days when everything was pen and paper and security was as simple as keeping client records under lock and key.

This begs the question: Is your CPA software compliant with financial institution security measures as mandated by the FTC? If it isn’t, what hangs in the balance were anything to go wrong? What steps can you take to ensure your software tools are an asset to your security plan and not a liability?

The FTC recommends a few key pointers to keep information systems safe from security breaches. This includes elements like:

  • Making sure only employees with special authorization have access to certain data
  • Ensure key storage areas are safeguarded from physical mishaps like flooding or fires
  • Keep records in a locked area especially when left unattended
  • Create security backup records
  • Have a secure way to dispose of customer information
  • Shred any documents that may contain any sort of sensitive information
  • Have a way of destroying data stored in disks, computers, hard drives, or cellphones
  • Take the necessary measures to ensure the secure transmission of customer information
  • Encrypt any data exchanged through email between you and the client

How we keep tax security at the forefront

Tax Security

When we built Mango to be the all-in-one software tool for CPA teams to do their best work, we built it with security in mind.

How? To start, our file sharing feature ensures every file you share is secured with encryption technology. That way, every document you send that has any PII (Personal Identifiable Information: name, address, social security number or other identifying number or code, telephone number, email address) is safe.

The next time you email files with our file sharing system, you can have the peace of mind that those files are being delivered safely to your clients and your client relationship trust isn’t broken.

This is also a great safe way to gather electronic signatures when you need to collect them over email. Let’s not forget the hassle it can be to need to have your client walk in personally to sign paperwork. Our secure file sharing and e-signature tools make efficient client management possible.

Secure client tax data with ImagineTime

Mango was built with the needs of today’s accounting agencies in mind. Though we’ve built a reliable tool for just about any need your accounting practice can have, you can also mix and match an array of tools that work for you and your needs.

Today, you not only need to be compliant, you also need to be efficient and streamline your accounting processes to keep expenses low as you build a happy recurring customer base. But it gets harder to do that successfully if you’re using the wrong tools.

Whether you need time and billing software, client portal tools, secure file sharing, a payment gateway, or a due date management system, we’ve created a tool to help you fulfill those needs and more. But don’t just take our word for it. Try it out free to get a feel for the tool that was created by accountants for accountants.

Request a demo here today to see how easy it is to run your accounting practice with ImagineTime.

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