Prepare Now to Be Ready for Hurricane Season

Prepare Now to Be Ready for Hurricane Season

The US coastline is about to face the worst of the 2022 hurricane season, and many businesses within a day’s drive are taking steps to prepare. While weatherproofing buildings and fueling generators is important, for tax professionals, there are a few more simple steps to be sure your business is ready to weather the storm.

Try Drake Tax for free! Download now!

What steps should you take before a storm?

The first step is to protect your data. Back up your electronic files to flash drives or DVDs. Once complete, store the backup media in a waterproof container in a secure area. It is reasonable to make a second copy of your data and store in a safe, secondary location, just in case of catastrophic damage to your physical office.

Despite the electronic revolution, income tax preparation businesses generate a lot of paper documents and these, too, need to be stored in the waterproof containers – both on-site and offsite.

Keep in mind, though, that paper documents do not always have to remain on paper; you can scan them and keep those digital images in a lot less physical space than their paper equivalents. (Tools like Drake Documents, Drake Portals, and GruntWorx can help you smoothly make the transition to a practically paperless office.)

Other than client tax returns, what else should you save?

Property-specific documents such as deeds, titles, and insurance policies are a good choice, as are receipts for computers and other major office machine purchases that could be expensive to replace if they are damaged in a storm.

You’ll want to build a detailed inventory of the furniture and office machines in your office, detailing the various items, along with their model and serial numbers.

Remember, if your tax preparation office or its contents are damaged by a hurricane or other natural disaster, you’ll need these numbers to prove there has been a loss and pave the way for getting replacements.

If you’d like some help building your inventory, check out the IRS’s disaster preparation workbook: Publication 584-B.

What should you do after a storm?

The ability to access documents after a natural disaster is an essential part of the rebuilding process, highlighting the importance of reliable data backups. Depending on the level of damage to your business, rebuilding records could be your first and biggest job.

Your records will also be valuable when applying for federal assistance or insurance claims; some may come from companies or vendors you’ve dealt with. To check out what the process involves, review Reconstructing Records from the IRS.

More information is available!

For more information on disaster preparation and recovery for your income tax prep business, see these resources courtesy of the IRS:

September is National Preparedness Month. To learn more, visit

Source: September is National Preparedness Month; IRS urges everyone to update and secure their records to prepare now for natural disasters

Story provided by

Know the Signs of Possible ID Theft

Know the Signs of Possible ID Theft

We all know that identity thieves aren’t letting up in their efforts to steal your clients’ personal information so they can file fraudulent tax returns. If anything, they’re picking up the pace. But how can you know your tax prep office has been a target?

Try Drake Tax for free! Download now!

What are the signs of identity theft tax refund fraud?

Identity thieves work in the shadows, so the evidence of their malicious work isn’t always obvious. But it is there if you know what to look for.

While any one of these symptoms may—or may not—mean your computer systems have definitely been compromised, they are indicators that need to be investigated:

  • Client e-filed returns rejected because client’s Social Security number was already used on another return.
  • More e-file acknowledgements received than returns the tax pro filed.
  • Clients responded to emails the tax pro didn’t send.
  • Slow or unexpected computer or network responsiveness such as:
    • Software or actions take longer to process than usual,
    • Computer cursor moves or changes numbers without touching the mouse or keyboard,
    • Unexpectedly locked out of a network or computer.

If you’ve had more than one of these indicators occur on your office system, it’s time to call a professional IT firm to confirm the root cause.

Client reports can help you spot identity theft

Your clients may also get an indicator that something is amiss. The Summit says you should be on the lookout for these warning signs:

  • IRS Authentication letters (5071C, 6331C, 4883C, 5747C) even though they haven’t filed a return.
  • A refund even though they haven’t filed a return.
  • A tax transcript they didn’t request.
  • Emails or calls from the tax pro that they didn’t initiate.
  • A notice that someone created an IRS online account for the taxpayer without their consent.
  • A notice the taxpayer wasn’t expecting that:
    • Someone accessed their IRS online account,
    • The IRS disabled their online account,
    • Balance due or other notices from the IRS that are not correct based on return filed or if a return had not been filed.

The upshot of all these indicators is that you, the tax professional, are the first line of defense against unlawful theft of your and your clients’ data.

When you see a pattern that doesn’t fit the circumstances, it’s time to investigate. Make sure you and your office have the best security possible, but don’t hesitate to get help if there’s a problem.

What should I do if I suspect data theft?

The first step toward recovery is to call the IRS, specifically the local IRS Stakeholder Liaison. They can notify IRS Criminal Investigation and other agency departments on your behalf. Do it IMMEDIATELY once data theft is confirmed; the IRS can move to block fraudulent returns in your clients’ names and can further assist you and your office staff.

Next, email the Federation of Tax Administrators for instructions on how to report information to your state and others where you e-file. Many times, states dictate that data breach information is reported to the state attorney general, and this may mean sending your information to multiple offices.

Once a data breach is identified, the IRS recommends tax pros identify and contact clients who may be affected by the breach and suggesting they acquire an IP PIN or, if necessary, file Form 14039, Identity Theft Affidavit.

Knowledge is power

The IRS website has a number of valuable resources available for tax professionals.

See Publication 5293, Data Security Resource Guide for Tax Professionals for an overview on avoiding data theft.

Help is also available from Publication 4557, Safeguarding Taxpayer Data, and from the Security Summit, a reminder about the importance of IP PINs.

Another vital piece of guidance comes from the National Institute of Standards and Technology, in Small Business Information Security: The Fundamentals.

Source: IR-2022-144

Story provided by

Security Summit Announces New Sample Security Plan

Security Summit Announces New Sample Security Plan

Most tax-season-preparation checklists include updating software, reviewing tax law changes, earning continuing professional education credits, and training seasonal staff. Creating or updating a written information security plan (WISP) is one often-overlooked item that should make everyone’s list. After all, tax professionals are required by the Federal Trade Commission’s Safeguards Rule to have one of these plans in place to protect client information.

Try Drake Tax for free! Download now!

Tax pros seeking help with a security plan for their office are in luck. The Internal Revenue Service announced the publication of a 29-page sample WISP by the Security Summit. Issued during the Summit’s “Protect Your Clients; Protect Yourself” educational outreach campaign, this document is the culmination of a months-long effort by the IRS, state departments of revenue, and tax industry.

Drake Software Director of Government Relations Jared Ballew currently serves as co-lead of the Security Summit Tax Professionals Working Group and is the incoming chair of the Electronic Tax Administration Advisory Committee. In the IRS news release, Jared explains that the Summit’s sample is an excellent resource for tax pros who need help creating a written information security plan for their office.

“There’s no way around it for anyone running a tax business,” he says. “Having a written security plan is a sound business practice—and it’s required by law. The sample provides a starting point for developing your plan, addresses risk considerations for inclusion in an effective plan, and provides a blueprint of applicable actions in the event of a security incident, data losses, and theft.”

It is important to note that this is not a one-size-fits-all document, and—as the WISP itself states—“it is not intended to replace your own research, to create reliance, or serve as a substitute for developing your own plan based upon the specific needs and requirements of your business or firm.” That said, the sample is written in plain language and designed to be flexible, so tax pros can easily adapt it for their office.

In addition to the download, the IRS recommends referencing documents like Publication 4557, Safeguarding Taxpayer Data; Publication 5293, Data Security Resource Guide for Tax Professionals; Identity Theft Central; and Small Business Information Security: The Fundamentals.

Source: IR-2022-147 

Story provided by

IRS Announces Tax Relief for Kentucky Flood Victims

IRS Announces Tax Relief for Kentucky Flood Victims

This summer, the country has been hammered by extreme weather—from oppressive heat waves to torrential rains. In response to deadly flooding in Eastern Kentucky, the Internal Revenue Service announced tax relief for counties the Federal Emergency Management Agency declared disaster areas.  

Try Drake Tax for free! Download now!

What is included in the Kentucky tax relief?

Deadlines for filing tax returns and making payments due on or after July 26, 2022, are pushed back to November 15, 2022, for declared disaster areas in Kentucky. Here are some of the deadlines affected by the tax relief:

  • August 1 quarterly payroll and excise tax returns
  • September 15 quarterly estimated income tax payments
  • October 17 individual extensions
  • October 31 quarterly payroll and excise tax returns

The IRS also notes they will abate “penalties on payroll and excise tax deposits due on or after July 26 and before August 10 … as long as the deposits are made by August 10, 2022.” Further, the agency says uninsured and unreimbursed losses from the flooding can be claimed on an individual or business return for either of the following years:

  • The year the loss occurred (in this instance, the 2022 return normally filed next year)
  • The return for the prior year (2021)

For more information about affected deadlines, visit “Disaster Assistance and Emergency Relief for Individuals and Businesses” on

Who will receive this tax relief?

Taxpayers with a residence or business in declared disaster areas automatically receive this tax relief without taking any specific action. Currently, those counties include:

  • Breathitt
  • Clay
  • Floyd
  • Johnson
  • Knott
  • Leslie
  • Letcher
  • Magoffin
  • Martin
  • Owsley
  • Perry
  • Pike
  • Wolfe

As FEMA continues to assess the situation in Kentucky, they may add counties to the list of tax-relief beneficiaries. We will update this page if additional areas are announced.

Source: IR-2022-145

Story provided by

Use IP PINs for Extra Security

Use IP PINs for Extra Security

It’s never too early to start planning for the next tax season. For millions of tax pros, that means figuring how to make their operations more secure.

One answer is to talk to your clients about signing up for an Identity Protection Personal Identification Number, or IP PIN. To keep the process secure, your clients have to sign up for their own IP PIN; you cannot do it for them. But once it’s in place, an IP PIN can be a vital brick in the defensive wall around your client’s tax information.

Try Drake Tax for free! Download now!

Do my clients need an IP PIN?

As we all become more cautious about cybersecurity, securing an IP PIN is an easy step for the client to take. This simple six-digit number is known only by the individual taxpayer and the IRS. The number should only be shared with a trusted tax professional.

The number itself is entered—usually next to the signature line on paper returns—to validate the taxpayer’s identity to the IRS, and may help speed processing. To maintain security, tax pros should not store clients’ IP PINs on their computer systems.

How do my clients get an IP PIN?

Signing up for an IP PIN, of course, is voluntary. Once issued, the IP PIN is good for one calendar year; the taxpayer will have to apply for a new one each year.

The IRS has an online tool, Get an IP PIN, where taxpayers can sign up. The IRS’ identity validation process could be time consuming, so taxpayers should check out Secure Access: How to Register for Certain Online Self-Help Tools before they start.

If your clients can’t get through the online process and their income meets certain parameters, use Form 15227, Application for an Identity Protection Personal Identification Number to apply.

If your clients can’t validate their identities, they won’t be issued an IP PIN.

Where can I get more security help?

Security recommendations are available to tax professionals through IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security: The Fundamentals from the National Institute of Standards and Technology.

Additional information is also available from Publication 5293, Data Security Resource Guide for Tax Professionals and the IRS’ Identity Theft Central webpages.

SourceSecurity Summit: Identity Protection PINs provide an important defense against tax-related identity theft

Story provided by

ETAAC Recommends IRS Funding, MeF Enhancements

ETAAC Recommends IRS Funding, MeF Enhancements

One of the Internal Revenue Service’s main advisory committees is asking Congress to give the agency the funding it needs to function well. The recommendations, split into two categories, come from the Electronic Tax Administration Advisory Committee, or ETAAC, in its annual report to Congress.

The first category, recommendations to Congress, seeks to provide the Internal Revenue Service with flexible, sustainable, and predictable multi-year funding—a change that would give the agency more stability than its current annual funding model. The recommendations also seek to provide the IRS with budgetary and legislative support that allows the IRS to capitalize on its successes to deliver a level of service that taxpayers expect and deserve.

Try Drake Tax for free! Download now!

The second category, recommendations to the IRS, addresses topics like the following:

  • Implement enhancements to Modernized e-File that remove impediments to e-filing, with appropriate security features, taxpayer consent and acknowledgements.
  • Promote the use of identity protection PIN through a national, year-long campaign, leveraging stakeholders including the tax and financial services industries, to highlight the benefits of the program.
  • Work collaboratively with states and software providers to develop a long-term roadmap for Payroll and Information Return Modernization.

For the full 2022 ETAAC report, visit the IRS website.

What else does ETAAC do?

Members of ETAAC also work closely with their counterparts on the Security Summit. Where the Security Summit is made up of tax practitioners, state tax agency representatives and national tax industry leaders, ETAAC is comprised of individual and business taxpayers, tax professionals, tax industry software developers, payroll service providers and representatives from the financial industry and state and local governments.

Source: Electronic Tax Administration Advisory Committee issues annual report to Congress

Story provided by