CPA firms that handle taxpayer data must meet specific IT security standards under the IRS Safeguards Rule . Because the IRS focuses on how firms protect Federal Tax Information (FTI), most 10–25 employee CPA firms need to implement multiple layers of technical, administrative, and physical security controls — not just antivirus software.
As a result, firms that ignore these requirements face penalties, failed audits, cyber insurance denial, and client trust damage. If you’re evaluating managed IT pricing for CPA firms , security and compliance should factor directly into that decision.
1. What Is the IRS Safeguards Rule (And Who It Applies To)?
The IRS Safeguards Rule applies to any CPA firm that accesses, stores, or transmits Federal Tax Information (FTI). In other words, if your firm prepares tax returns or works with IRS data, these rules apply to you.
- Individual tax returns
- Business tax filings
- Payroll and financial data
- Client identification information
Because of this access, your firm must maintain a Written Information Security Plan (WISP) along with supporting technical controls.
Important: Firm size does not provide an exemption. The IRS holds small CPA firms to the same safeguards standards as large firms.
2. The Core IT Security Requirements CPA Firms Must Meet
IRS compliance does not rely on a single tool. Instead, it depends on layered security working together.
At a minimum, CPA firms should implement the following safeguards:
- Endpoint protection beyond basic antivirus
- Multi-factor authentication (MFA)
- Secure user access controls
- Encrypted backups
- Patch management and system updates
- Secure remote access
However, firms that rely on outdated computers, shared logins, or unverified backups expose themselves to unnecessary compliance risk.
3. Administrative Requirements: What Firms Often Miss
While many CPA firms focus on technology, they often overlook administrative safeguards. Unfortunately, auditors and insurers care just as much about documentation as they do about tools.
- A documented Written Information Security Plan (WISP)
- Employee security awareness training
- Defined incident response procedures
- Access controls for seasonal or temporary staff
- Vendor risk management
As a result, missing paperwork can cause the same level of trouble as missing security controls.
4. Common Security Gaps That Cause CPA Firms to Fail Reviews
Most CPA firms do not fail compliance reviews because of sophisticated cyberattacks. Instead, they fail due to basic and preventable gaps.
- No documented WISP
- Incomplete or untested backups
- Weak passwords or missing MFA
- Unsupported operating systems
- No proof of security monitoring
Because generic IT providers often overlook IRS expectations, these issues appear most frequently in firms using non-specialized IT support.
5. How CPA-Focused IT Security Is Different
Generic IT security protects devices. CPA-focused IT security protects firms.
An MSP specializing in accounting firms designs security controls around IRS safeguards, balances protection with tax-season usability, and anticipates audit questions before they arise.
Why IRS-Aligned IT Security Matters for CPA Firms
When IT security aligns with accounting workflows, CPA firms benefit in several ways:
- Fewer disruptions during tax season
- Lower audit and insurance risk
- Improved client trust
- Clear documentation when questions arise
At the same time, this approach supports proactive tax season IT preparation for CPA firms , which further reduces risk.
Call to Action
If you are unsure whether your current IT setup meets IRS safeguards expectations, clarity should come before any sales conversation.