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Understanding Pub 4557 & How your Managed Service Provider Can Help you Stay Compliant

As a financial institution, you are responsible for safeguarding your client's sensitive information.

One way to do this is to ensure that you are compliant with Pub 4557. This regulation sets forth the minimum requirements for electronic storage of records, including email. It’s important to note that email is not considered a secure method of storing records and does not meet compliance requirements. Today we’re honing in on all things Pub 4557, what it is, why it's important, and the exact rules you need to follow to ensure you're compliant.

 

What is Pub 4557?

Pub 4557 is a document published by the United States Internal Revenue Service (IRS) that outlines the requirements for the electronic filing of tax returns. The purpose of Pub 4557 is to ensure that taxpayers' private information is protected when it is transmitted electronically.

In order to meet the requirements of Pub 4557, taxpayers must use a secure method of transmitting their tax return information to the IRS. This can be accomplished through a secure website, encrypted email, or a secure client portal.

 

What is needed to comply with Pub 4557?

In order to comply with Pub 4557, your practice must implement physical, technical, and administrative safeguards for storing and transmitting member information. They must also develop and maintain policies and procedures for managing member data.

Some of the specific Pub 4557 rules around data include:

  • Encrypting all confidential member information when it is transmitted electronically.
  • Ensuring that only authorized personnel to have access to confidential member information.
  • Physically securing all paper records containing confidential member information or using strong passwords with automatic screen locking to protect digital information.

Implementing a disaster recovery plan in case of a data breach or attack.

 

What happens when your business is not compliant with Pub 4557?

While there are no specific fines on record for not being Pub 4557 compliant, there are varied consequences. For example, tax preparers who do not comply with Pub 4557 may be subject to penalties, and in the most serious cases, will lose the ability to work with taxpayers.

 

Why do you need the best in cyber security when you are dealing with people's financial information?

You need the best in cyber security because you are dealing with people's  financial information. Financial information is a target for cybercriminals  because it can be used to steal money or commit fraud. Additionally, financial information is often personal and sensitive, so it is crucial to protect it from unauthorized access.

 

How can a Managed Service Provider (MSP) help you comply with Pub 4557?

There are several ways an MSP can help you comply with Pub 4557. First and foremost, your MSP can provide secure storage for all confidential member information. This ensures that only authorized personnel have access to the data and that it is protected from physical theft or damage.

An MSP can also help you meet the requirements for electronically transmitting confidential member information by encrypting all data before it is sent. This step makes it impossible for unauthorized individuals to intercept your client’s sensitive information.

Finally, an MSP can assist you in developing and implementing a disaster recovery plan. This plan will ensure that you are able to quickly and effectively recover from a data breach.

 

So, why is Pub 4557 compliance so important?

Compliance with Pub 4557 is vital for any tax preparer because it helps protect your client’s sensitive information from falling into the wrong hands. While its not only important from a security standpoint, compliance with Pub 4557 is also required by law. Businesses that fail to comply with the regulation may be subject to penalties as noted above.

 

Our Final Thoughts

Overall, Pub 4557 is a vital regulation for any tax preparer because it helps protect sensitive member information from falling into the wrong hands. An MSP can help you meet the requirements of Pub 4557 by providing secure storage for your data, encrypting all confidential information before it is transmitted, and assisting you in developing a disaster recovery plan. Compliance with Pub 4557 is important from a security standpoint and is also required by law. Businesses that fail to comply with the regulation may be subject to fines and other penalties. Therefore, it is crucial that you work with an MSP who can help you ensure compliance with Pub 4557.

If you have any questions about Pub 4557 or how we at Intuitive Networks  can help you meet compliance requirements please contact us today! We would be happy to answer any of your questions and help you ensure you are compliant.

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