Filing taxes can be complex and time-consuming. But explaining a data breach involving tax information during tax season? That’s a compliance headache no business wants.
At Prescott, we understand the intersection of compliance and cybersecurity—especially when it comes to sensitive financial data. With tax season in full swing, now is the time to make sure your business is not just filing correctly, but also handling tax-related information securely and in line with regulatory requirements.
Why Tax Season Is High-Risk for Data Security
Tax documents contain a wealth of personally identifiable information (PII) and financial data—prime targets for cybercriminals. During this time of year, businesses are more likely to:
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Exchange sensitive documents with accountants, payroll providers, and internal teams
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Store tax records across digital platforms or on-premise systems
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Overlook security practices in the rush to meet deadlines
All of these activities increase exposure to data risks, and if not managed properly, they can lead to regulatory violations, financial penalties, and reputational harm.
How to Handle Tax Data the Right Way
1. Know What You’re Collecting and Storing
Start with a clear inventory of what tax-related data you hold, where it resides, and who has access. Understand how this data is classified under laws like HIPAA, GLBA, or state privacy regulations.
2. Protect with Proper Security Controls
Ensure encryption is in place both in transit and at rest. Use secure file transfer solutions rather than email attachments, and enforce strong access controls and multi-factor authentication.
3. Follow a Data Retention Policy
Retain tax records for only as long as legally required, and securely dispose of outdated files. This limits your risk and keeps you aligned with compliance standards.
4. Prepare for Incident Response
If a breach occurs, quick and compliant reporting is critical. Your incident response plan should outline how to notify affected parties and regulators, particularly when financial or personal data is involved.
Compliance Is More Than Just Checking Boxes
Protecting tax data isn’t just a technical concern—it’s a compliance obligation. Organizations subject to industry-specific or state-level data protection laws must take proactive steps to manage tax data responsibly.
At Prescott, we help businesses build defensible compliance strategies that reduce risk, align with regulations, and stand up to scrutiny.
Make Compliance Part of Your Tax Season Checklist
Don’t wait for a breach to reveal a gap in your data governance. Let this tax season be an opportunity to strengthen your policies, secure your data, and protect your organization’s integrity.
