Step-by-Step Guide

IRS cybersecurity compliance simplified

IRS Publication 4557 and the FTC Safeguards Rule can feel overwhelming, but compliance does not have to be complicated. This guide breaks the entire process into five clear steps that any tax practice can follow.

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The Process

Five steps to full IRS compliance

Follow these steps in order. Most solo practitioners can reach basic compliance in under a week. With managed services from Bellator, the technical steps can be completed in one to two days.

Create Your Written Information Security Plan (WISP)

Estimated time: 2-4 hours with our template

The WISP is the foundation of your compliance program. It is a formal document that describes how your practice protects taxpayer data. The IRS requires every tax professional with a PTIN to have one, regardless of practice size.

Download our free IRS-compliant WISP template to get started

Name a designated security officer for your practice (this can be you)

Customize the template with your specific practice details, systems, and procedures

Have every employee read and sign acknowledgment of the WISP

Store the signed WISP where you can produce it if audited

Conduct a Risk Assessment

Estimated time: 4-8 hours for a typical practice

A risk assessment is a systematic review of everywhere taxpayer data exists in your practice and what could go wrong at each point. The IRS and FTC both require you to identify, evaluate, and document these risks.

Inventory every system, device, and location where taxpayer data is stored

Identify who has access to each system and whether that access is appropriate

Evaluate threats: phishing, ransomware, physical theft, insider misuse, vendor risk

Rate each risk by likelihood and potential impact

Document your findings and the safeguards that address each identified risk

Implement Required Security Controls

Estimated time: 1-2 weeks (or 1-2 days with managed services)

Based on your risk assessment, you must put specific safeguards in place. The FTC Safeguards Rule and IRS Publication 4557 outline the minimum controls every tax practice needs.

Enable multi-factor authentication on all accounts that access taxpayer data

Install and configure endpoint protection (antivirus/EDR) on every workstation

Encrypt taxpayer data at rest on hard drives and in transit via email

Set up automated, encrypted backups with regular test restores

Implement a password policy requiring strong, unique passwords and a password manager

Configure your firewall and restrict remote access to VPN-only connections

Train Your Team

Estimated time: 1-2 hours per session

The IRS requires security awareness training for all employees who handle taxpayer data. Training must occur at hire and at least annually thereafter. Over 90% of tax practice breaches start with a human mistake, making this one of the most important steps.

Conduct initial security training for all current employees

Cover phishing recognition, password hygiene, and secure data handling

Run simulated phishing campaigns to test staff awareness

Document all training dates, topics, and attendee signatures

Schedule annual refresher training and add training to your onboarding checklist

Document, Review, and Maintain

Estimated time: 2-4 hours annually, plus ongoing documentation

Compliance is not a one-time project. The IRS and FTC require you to review and update your security program at least annually. You must also have a documented incident response plan ready before you need it.

Create an incident response plan covering breach detection, containment, and IRS notification

Set a calendar reminder for your annual WISP review and risk reassessment

Document all security changes, incidents, and training throughout the year

Review vendor and third-party access annually and remove unnecessary connections

Update your WISP whenever you change technology, hire new staff, or identify new risks

Quick Reference

IRS compliance checklist

Use this checklist to track your progress. Every item below is either explicitly required or strongly recommended by IRS Publication 4557 and the FTC Safeguards Rule.

Documentation

Written Information Security Plan (WISP) created and signed

Designated security officer appointed

Risk assessment completed and documented

Incident response plan written and tested

Technical

Multi-factor authentication enabled on all systems

Endpoint protection installed on all workstations

Data encryption at rest and in transit

Automated encrypted backups running daily

Firewall configured and remote access secured

Password manager deployed with strong password policy

People

All employees completed security awareness training

Phishing simulation campaigns running

Employee acknowledgment forms signed

Ongoing

Annual security review scheduled

Vendor access reviewed and documented

You do not have to do this alone

While this guide makes compliance approachable, many tax professionals prefer to have experts handle the technical implementation and ongoing management. Bellator provides managed cybersecurity services designed specifically for tax practices. We handle steps two through five so you can focus on what you do best: serving your clients.

Talk to a compliance specialist

Start with the free WISP template

Step one is your WISP. Download our IRS-compliant template and have your Written Information Security Plan ready in under two hours. No credit card required.

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