Tax professionals must act fast after discovering a data breach
Anyone can be a target of cybercriminals and scammers. Unfortunately, tax professionals can seem like the big fish in a sea of potential targets because of how much financial data they use to conduct their business. Even a careful, prepared tax pro may fall victim to a crime. If that happens, there are several key things they should do to protect their clients and their business.
Their clients It is vitally important that tax professionals inform all their clients of a breach and encourage them to apply to the IRS for an Identity Protection Personal Identification Number, or IP PIN. The Electronic Tax Administration Advisory Committee called the IP PIN, “The number one security tool currently available to taxpayers from the IRS.”
Preparers should work with law enforcement to determine when it’s best to send an individual letter to all potential victims to inform them of a breach.
How to report a data breach
Contact the IRS – The tax preparer should report client data theft to their local IRS Stakeholder Liaison. The liaison will notify IRS Criminal Investigation and others within the agency on the tax professional’s behalf. If reported quickly, the IRS can take steps to block fraudulent returns in clients’ names.
Call local police – The taxpayer should contact police to file a report on the data breach.
Credit and identity theft protection agency – Certain states require that preparers offer credit monitoring and identity theft protection to victims of identity theft.
Credit bureaus – Preparers should notify them if there is a compromise and clients may seek their services.
Review security measures used to protect client data Data protection is key in helping avoid data breaches. To help tax pros protect their clients and their business, the IRS, state tax agencies and the tax industry partners who make up the Security Summit created a Taxes-Security-Together Checklist. Whether a one-person shop or partner in a large firm, everyone can take several relatively simple steps to protect their clients and their business data.
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