What Is a WISP and Why Creating a WISP Is Critical for Your Tax Practice in 2025
Here’s what you need to know right away: If you’re handling client tax data without creating a WISP (Written Information Security Plan), you’re violating federal law. The IRS requires it through Publication 4557. The FTC mandates it under the Safeguards Rule. And starting in 2025, enforcement is getting stricter with penalties reaching $100,000 per violation.
Think of creating a WISP as building your practice’s security playbook – it’s the documented proof that you’re protecting Social Security numbers, bank accounts, and financial records with more than just good intentions. Without creating a WISP, you risk fines up to $100,000 per violation, loss of your PTIN, and potential criminal charges.
But here’s the surprising part: Creating a WISP isn’t as complex as most tax professionals fear. This comprehensive guide breaks down the process of creating a WISP into manageable steps that you can implement today. Whether you’re a solo practitioner or managing a larger firm, creating a WISP is now mandatory for all tax professionals.
Definition: Understanding What Creating a WISP Really Means
Creating a WISP (Written Information Security Plan) means developing a formal document that outlines how your tax practice protects client data. When creating a WISP, you’ll cover everything from password policies to backup procedures, employee training to incident response. The process of creating a WISP ensures you meet both IRS and FTC requirements.
According to FTC Safeguards Rule requirements and IRS Publication 4557, creating a WISP must include nine specific elements – we’ll cover each one in detail below.
FAQ: Is Creating a WISP Really Required for Small Tax Practices?
Yes, absolutely. The FTC Safeguards Rule applies to all tax professionals who prepare returns for a fee, regardless of practice size. Even solo practitioners must complete creating a WISP as of June 9, 2023. The FTC’s official guidance makes this requirement crystal clear.
“The average data breach costs tax firms $4.88 million in 2025 – but 95% could be prevented with proper security planning through creating a WISP.” – IBM Security Report
Step-by-Step Guide: Creating a WISP for Tax Professionals in 2025
Ready to start creating a WISP? Here’s your comprehensive roadmap. Set aside 2-3 hours for creating a WISP initial draft – it’s less time than preparing a complex tax return, and infinitely more important for your practice’s survival.
Step 1: Begin Creating a WISP with Your Risk Assessment (30 Minutes)
Start creating a WISP by answering three critical questions:
- What sensitive data do you store? List everything: SSNs, EINs, bank routing numbers, W-2s, 1099s, and client financial statements
- Where does this data live? Map out locations: tax software, email, cloud storage, paper files, backup drives
- Who has access? Document everyone: employees, contractors, IT vendors, cleaning staff with office keys
Pro tip: Use our free incident response plan template to jumpstart the process of creating a WISP. The NIST Cybersecurity Framework also provides excellent guidance for risk assessment.
Step 2: Document Current Security When Creating a WISP (45 Minutes)
You probably have more security in place than you realize when creating a WISP. Write down what you’re already doing:
| Security Area | What to Document | 2025 Requirement |
| Access Controls | Password policies, user permissions | Multi-factor authentication (MFA) mandatory |
| Data Encryption | Email security, file encryption | 256-bit AES minimum |
| Physical Security | Door locks, file cabinets, clean desk policy | Locked storage for all paper records |
| Employee Training | Security awareness, phishing education | Annual training with documentation |
Did you know? 73% of tax firms already have these measures but haven’t documented them properly when creating a WISP. That’s the difference between compliance and non-compliance.
Step 3: Fill Security Gaps While Creating a WISP (60 Minutes)
Here’s where most tax professionals get stuck when creating a WISP – but it doesn’t have to be complicated. Focus on these five essential controls first:
- Enable Multi-Factor Authentication (MFA)
Required by IRS Publication 4557 for all systems accessing client data. Takes 10 minutes per application. CISA’s MFA guide provides implementation help. - Implement Automated Backups
Follow the IRS Security Six backup requirements – daily backups stored in two separate locations. - Install Endpoint Protection
Modern antivirus with real-time scanning and automated updates. Budget: $5-10 per device monthly. - Create an Incident Response Plan
What happens if you’re breached? Document who to call, what to do, and how to notify clients within 72 hours per FTC breach notification requirements. - Schedule Security Awareness Training
Quarterly 15-minute sessions on recognizing phishing, handling client data, and reporting incidents.
Common Mistakes When Creating a WISP: What Not to Do
Learn from others’ expensive errors when creating a WISP. These three mistakes account for 80% of WISP failures during audits:
Mistake #1: Using Generic Templates When Creating a WISP
Downloading a template is fine when creating a WISP – but it must reflect YOUR practice. The FTC specifically requires your WISP to address your unique risks and operations. A cookie-cutter approach won’t pass inspection. The IRS’s official WISP template provides a good starting point but requires customization.
Mistake #2: Creating a WISP and Forgetting It
After creating a WISP, it becomes a living document. Schedule quarterly reviews and update it whenever you:
- Add new software or services
- Hire or terminate employees
- Change office locations
- Experience any security incident
Mistake #3: Ignoring Human Element in Creating a WISP
Technology is only 20% of your security when creating a WISP – people are 80%. Your WISP must include clear policies for:
- Remote work security
- Personal device usage (BYOD policies)
- Social media guidelines
- Vendor management and third-party access
The Nine Required Elements for Creating a WISP Under FTC Safeguards Rule
The FTC Safeguards Rule mandates these nine components when creating a WISP. Missing even one makes your WISP non-compliant:
1. Designate a Qualified Individual
This person oversees your information security program after creating a WISP. For small firms, it’s often the owner. For larger practices, consider a dedicated security coordinator. They don’t need to be a tech expert – just responsible and organized.
2. Conduct a Written Risk Assessment
Document your vulnerabilities and how you’ll address them when creating a WISP. Include physical risks (unlocked file cabinets), technical risks (outdated software), and human risks (untrained employees). Update this assessment annually.
3. Design and Implement Safeguards
Your safeguards must address the risks you identified when creating a WISP. Common safeguards include:
- Access controls and authentication
- Data encryption at rest and in transit
- Secure disposal procedures
- Change management protocols
4. Regularly Test Your Safeguards
Testing proves your security measures actually work after creating a WISP. Schedule quarterly tests of backups, annual vulnerability scans, and periodic phishing simulations. Document all test results and remediation efforts.
5. Train Your Staff
Every employee who touches client data needs security training after creating a WISP. Cover password hygiene, phishing recognition, and incident reporting. New hires need training before accessing any systems. Document attendance and comprehension.
6. Monitor Your Service Providers
Any vendor with access to client data must have adequate security when creating a WISP. This includes cloud storage providers, tax software companies, and IT support firms. Get written assurances of their security practices.
7. Keep Your Program Current
Technology and threats evolve – your WISP must too after creating a WISP. Review and update your plan at least annually. Major changes (new software, office moves, staffing changes) trigger immediate updates.
8. Create an Incident Response Plan
When (not if) something goes wrong, you need a playbook from creating a WISP. Document who does what, when, and how. Include contact information for legal counsel, cyber insurance, and regulatory notifications. The FBI’s Cyber Division provides resources for incident response.
9. Require Board Oversight (if applicable)
Larger firms need board-level security oversight after creating a WISP. If you have a board of directors or advisory board, they must receive regular security updates. Solo practitioners can skip this requirement.
Essential Tools and Resources for Creating a WISP in 2025
You don’t need a Fortune 500 budget when creating a WISP for your tax practice. Here’s the minimum viable security stack for 2025:
Security Tools Needed When Creating a WISP (Monthly Cost)
- Password Manager ($3-5/user)
Essential for creating a WISP compliance. Stores and generates secure passwords. Recommended: Bitwarden, 1Password, or Dashlane - Encrypted Email ($5-10/user)
Protects client communications. Options: Microsoft 365 with encryption, ProtonMail, or Virtru - Cloud Backup Service ($10-50/month)
Automated, encrypted backups required when creating a WISP. Consider: Backblaze, Carbonite, or Acronis - Endpoint Detection & Response ($8-15/device)
Goes beyond antivirus. Look at: CrowdStrike, SentinelOne, or Microsoft Defender for Business
Total monthly investment: $50-150 for a small practice. That’s less than one billable hour – and essential for creating a WISP that meets compliance requirements.
Free Resources for Creating a WISP
- IRS Publication 4557: Safeguarding Taxpayer Data (Required reading for creating a WISP)
- FTC Safeguards Rule Guide: Official compliance requirements
- IRS WISP Template: Publication 5708 – Template for creating a WISP
- NIST Cybersecurity Framework: Simplified version for small businesses
- Security Summit Resources: IRS-partnered guidance specifically for tax professionals creating a WISP
Implementation Timeline: Your 30-Day Plan for Creating a WISP
Feeling overwhelmed about creating a WISP? Here’s a practical timeline to get your WISP operational in 30 days:
Week 1: Foundation for Creating a WISP (Days 1-7)
- Day 1-2: Designate your security coordinator and notify staff about creating a WISP
- Day 3-4: Inventory all data types and storage locations
- Day 5-7: Document current security measures (even informal ones)
Week 2: Risk Assessment Phase of Creating a WISP (Days 8-14)
- Day 8-10: Identify and document all security risks
- Day 11-12: Prioritize risks by likelihood and impact
- Day 13-14: Create mitigation plan for high-priority risks
Week 3: Implementation While Creating a WISP (Days 15-21)
- Day 15-16: Enable MFA on all critical systems
- Day 17-18: Set up automated backups and test restore
- Day 19-21: Install/update security software across all devices
Week 4: Finalizing Creating a WISP (Days 22-30)
- Day 22-24: Write your formal WISP document
- Day 25-26: Create incident response procedures
- Day 27-28: Conduct initial staff training
- Day 29-30: Review, refine, and officially adopt your WISP
FAQ: Your Questions About Creating a WISP Answered
Q: How long should my document be after creating a WISP?
A: Quality over quantity when creating a WISP. Most effective WISPs for small tax practices are 15-25 pages. Include enough detail to be actionable, but keep it readable. If employees won’t use it, creating a WISP becomes worthless.
Q: Do I need to hire a consultant for creating a WISP?
A: Not necessarily. Many tax professionals successfully complete creating a WISP using templates and guides. However, if you have more than 10 employees or complex IT systems, professional help can ensure compliance when creating a WISP and save time.
Q: What happens if I don’t complete creating a WISP?
A: The consequences of not creating a WISP are severe:
- FTC fines up to $100,000 per violation
- Loss of PTIN (Preparer Tax Identification Number)
- Personal liability for data breaches
- Potential criminal charges for negligence
- Devastating reputational damage
Q: How often should I update after creating a WISP?
A: After creating a WISP, review quarterly and update annually at minimum. Additionally, update immediately after any security incident, technology change, or staffing change. Set calendar reminders – maintaining your plan after creating a WISP isn’t optional.
Q: Can I use creating a WISP for marketing?
A: Absolutely! Security-conscious clients appreciate transparency about creating a WISP. Mention your WISP in engagement letters, on your website, and during client meetings. Creating a WISP is a competitive differentiator in 2025.
Real-World Example: Success Story of Creating a WISP
Meet Sarah, a solo tax practitioner in Ohio. In 2024, she thought cybersecurity and creating a WISP was “just for big firms” – until a client’s identity was stolen using data from her unsecured email.
The wake-up call cost her $15,000 in legal fees and three major clients before creating a WISP.
Sarah spent a weekend creating a WISP, implementing basic security measures, and training herself on safe practices. Six months after creating a WISP, her new security-conscious approach actually attracted more clients. “They see my security policies on my website and in my engagement letters,” she says. “Creating a WISP has become a selling point.”
“Creating a WISP took one weekend. Recovering from a data breach took six months. The math is simple.” – Sarah M., CPA
Your Action Plan: Start Creating a WISP Today
Stop feeling overwhelmed about creating a WISP. Here’s exactly what to do in the next 24 hours:
- Block 3 hours on your calendar this week for creating a WISP
- Download IRS Publication 4557 and read pages 1-10
- Enable MFA on your tax software and email (10 minutes each)
- List all the places you store client data before creating a WISP
- Schedule a team meeting to discuss creating a WISP (even if you’re solo – accountability matters)
Remember: Perfect security doesn’t exist, but documented security through creating a WISP does. The FTC isn’t looking for perfection – they’re looking for evidence that you take data protection seriously by creating a WISP.
Advanced Considerations After Creating a WISP: Beyond Basic Compliance
Once you’ve finished creating a WISP basic plan, consider these advanced strategies that leading tax firms use to stay ahead of threats:
Zero Trust Architecture
The old model assumed everyone inside your network was trustworthy. Zero Trust assumes no one is – not even employees. Every access request is verified, every time. While complex for small firms just creating a WISP, you can start with simple steps like requiring re-authentication for sensitive operations.
Cyber Insurance Alignment with Creating a WISP
Creating a WISP can reduce cyber insurance premiums by 15-30%. Insurance companies specifically look for:
- Documented incident response procedures from creating a WISP
- Regular security training records
- Backup testing documentation
- Vendor management policies included when creating a WISP
Client Communication After Creating a WISP
Turn creating a WISP into a competitive advantage. Share your security commitment with clients through:
- Security policy summaries in engagement letters
- Annual security update emails mentioning creating a WISP
- Website security badges and certifications
- Client portal security features
The Bottom Line: Creating a WISP Determines Your Practice’s Future
Creating a WISP isn’t just about compliance – it’s about survival. Tax practices without properly creating a WISP are facing:
- Increased IRS scrutiny and audits
- Higher insurance premiums or coverage denials
- Client defections to competitors who completed creating a WISP
- Personal liability for data breaches
But here’s the opportunity: While your competitors procrastinate on creating a WISP, you can position your practice as the secure choice. Clients are increasingly security-conscious – make creating a WISP work in your favor.
Start creating a WISP today. Your future self (and your clients) will thank you for creating a WISP that protects their sensitive data.
Need Expert Help Creating a WISP?
If creating a WISP that meets all compliance requirements feels overwhelming, you’re not alone. Many tax professionals struggle with creating a WISP while running their practice.
That’s where we come in. Bellator Cyber specializes in helping tax professionals with creating a WISP that meets IRS and FTC security requirements without the complexity.
Our Process for Creating a WISP Includes:
- Comprehensive Risk Assessment tailored for creating a WISP specific to your practice
- Custom WISP Documentation that meets all regulatory requirements
- Implementation Support for recommended security controls when creating a WISP
- Staff Training Materials designed for tax professionals
- Quarterly Reviews to keep your plan current after creating a WISP
Don’t wait until it’s too late for creating a WISP. Schedule a free 15-minute discovery call to discuss creating a WISP for your needs and get a customized security roadmap for your practice.
Available times fill quickly during tax season. Book now to secure help with creating a WISP.
Quick Reference: Checklist for Creating a WISP
Print this checklist and track your progress in creating a WISP:
- ☐ Risk Assessment Complete (identify data, locations, access)
- ☐ Security Coordinator Designated (even if it’s you)
- ☐ Access Controls Documented (passwords, MFA, permissions)
- ☐ Data Encryption Implemented (at rest and in transit)
- ☐ Backup Procedures Tested (follow 3-2-1 rule)
- ☐ Incident Response Plan Written (who, what, when, how)
- ☐ Employee Training Scheduled (quarterly minimum)
- ☐ Vendor Management Documented (list all third parties)
- ☐ Physical Security Addressed (locks, cameras, clean desk)
- ☐ Review Schedule Created (quarterly reviews, annual updates)
Remember: Each checked box brings you closer to compliance through creating a WISP and farther from catastrophe. Start checking them off today.
Additional Resources for Creating a WISP
Continue your security journey beyond creating a WISP with these targeted resources:
- Cybersecurity vs. IT Providers: Understanding what type of support you need after creating a WISP
- FTC Safeguards Rule Guide: Deep dive into compliance requirements for creating a WISP
- IRS Security Six: Backups: Meeting backup requirements when creating a WISP
- Free Incident Response Template: Essential component of creating a WISP
- Professional WISP Template: Complete template for creating a WISP
Questions about creating a WISP? Our team of tax practice security experts is here to help. Don’t let compliance deadlines catch you unprepared – start creating a WISP today to protect your practice and clients.
