All names and identifying details in this case study have been changed to protect privacy.

Living in today's digital age is a fascinating and exciting time. With every new technological advance, we find ways to make our lives easier and accomplish tasks faster. Unfortunately, this new digital era also brings new threats and challenges that we need to be equipped to handle. In the world of tax and accounting professionals, many online resources and software platforms have made life easier by enabling more efficient work, ensuring more accurate calculations, and organizing records more effectively. However, while these technological advances provide convenience, they also create prime targets for cybercriminals seeking to access sensitive information. Now, more than ever, it is crucial to take proactive measures against cyber criminals and data breaches to protect yourself, your business, and your clients.

The Cybersecurity Gap

At Protection Plus, we have encountered many professionals who have experienced cyber breaches. Some professionals are fortunate enough to have cybersecurity measures in place, allowing breaches to be resolved with minimal effort. On the flip side, many underprepared business owners are completely blindsided by a data breach, leading to unfortunate circumstances for the business and often their clientele. There is a lot to be learned from these experiences, and by sharing them, we aim to help accounting and tax professionals ensure they are prepared in case they face similar situations.

Case Study: The Cost of Insufficient Cybersecurity Measures

Recently, we became aware of a situation that exemplifies how a simple data breach can wreak havoc on a business. In this case study, we focus on a cyber security breach at Melanie Smith Accounting*, a tax preparation firm in suburban Indianapolis. Melanie Smith* was alerted by her software company about suspicious activity involving her EFIN number. She discovered that 25-30 fraudulent tax returns with refunds totaling over $2 million had been filed using her stolen EFIN. Although most of the returns were rejected by her software company, one return went through before her software could flag it. Melanie contacted the IRS for a new EFIN to try and rectify the problem but did not correctly report the breach.

Melanie believed her firewalls and antivirus software provided sufficient protection, but this incident revealed her vulnerabilities. Lacking knowledge and a response plan, she became overwhelmed when learning about her legal obligations, such as notifying clients and authorities, hiring IT and legal experts, and setting up credit monitoring and support lines. These expenses, estimated between $30,000 and $80,000, were not covered by her existing insurance, leaving her financially strained and facing the possibility of closing her business.

This situation underscores the importance of taking serious cybersecurity measures, including education, proactive planning, and appropriate insurance. As we embrace the conveniences and efficiencies of digital advancements, we must also acknowledge the accompanying risks. Cyberattacks are increasingly common, and no business is immune. A Written Information Security Plan (WISP) and a response plan are not merely optional; they are critical components that can prevent devastating breaches and ensure the continuity and prosperity of businesses like Melanie Smith Accounting. By investing in comprehensive cybersecurity, you can protect your clients' sensitive information, uphold your professional integrity, and secure the future of your business in an ever-evolving digital age.

*Names have been changed to protect privacy

 By: Hayley Bales, Marketing Communications Specialist [Protection Plus]

Looking for a cybersecurity solution for your business?

Protection Plus offers access to a comprehensive solution designed specifically for tax and accounting professionals. ERO Cyber Security is a complete package offering over $100,000 in coverage plus extensive breach response services for just $395 per year. This package includes tailored training, tools, and procedures needed to understand and mitigate data security risks. The ERO Cyber Security package ensures that tax and accounting professionals are protected and prepared against cyber threats, offering peace of mind and financial security in the face of potential cyber incidents.

To learn more, visit EROcybersecurity.com or call 866-942-4186, and a Protection Plus representative will assist you.

ERO Cyber Security insurance is being offered as a unique benefit to American Advantage Association members. The insurance is underwritten by Tokio Marine HCC—Cyber & Professional Lines Group and secured by Houston Casualty Company. Tokio Marine HCC—Cyber & Professional Lines Group, based in Los Angeles, CA, will handle claims. Tax Protection Plus is making this program available through a partnership with Trupoint Marketing Insurance Agency, the insurance agent offering the program.