FTC Safeguards Rule: A Proactive Guide to OBBBA Compliance

• A New Class of Data: The One Big Beautiful Bill Act (OBBBA) now requires firms to collect and manage hyper-specific client data, including tip income, overtime pay, and even Vehicle Identification Numbers (VINs). [1]
• Existing Rules, Expanded Scope: While OBBBA creates no new cybersecurity laws, it dramatically expands the scope of data that falls under the existing, strict regulations of the FTC Safeguards Rule and IRS Publication 4557. [7, 8, 15]
• PTIN Renewal at Risk: The IRS requires every tax preparer to maintain a data security plan to be eligible for PTIN renewal. An outdated plan that doesn’t account for OBBBA’s new data types could put your firm’s ability to file at risk. [13, 14]
• 60% of Breaches Start with Email: The operational chaos surrounding OBBBA’s implementation makes firms more vulnerable to phishing and email compromise attacks that already cause the majority of breaches in the financial sector. [18]

It’s late. You’re looking at a client’s file, but the work has changed. Since the One Big Beautiful Bill Act (OBBBA) was signed into law, your data collection responsibilities have multiplied. It’s no longer just about income; it’s about the granular details: specific overtime categories, qualified tips, and even VINs for auto loans. [1] You know that every new data field you’re now required to handle is another potential liability, another door for a cybercriminal to walk through.

The question is no longer just about taxes. It’s about security. It’s about compliance. And most importantly, it’s about whether the plans and infrastructure you have in place are still good enough.

While OBBBA itself doesn’t introduce new cybersecurity laws, it creates a massive ripple effect. It incorporates all the existing, stringent rules from the FTC and the IRS, applying them to a much wider and more complex set of data. [2, 3] Your responsibilities haven’t changed, but your attack surface has grown exponentially. This guide provides a clear, actionable framework for firm leaders to address the new pressures of OBBBA and ensure their practice remains secure, compliant, and resilient.

Why Your Old Security Playbook Isn’t Enough

The core of the challenge is that OBBBA forces you to handle data that is not only more granular but also more personal. This creates a new level of risk:

• A Wider Attack Surface: Each new data point is a new potential vulnerability. Cybercriminals no longer need to breach your entire system; compromising a single, poorly-secured data stream is enough. [1]
• More Powerful Data for Fraud: Detailed wage breakdowns and occupation codes are a goldmine for sophisticated social engineering and identity theft schemes, as noted by cybersecurity analysts at the SANS Institute. [19]
• The Software Update Attack Vector: Your firm’s operations are now at the mercy of your tax software provider’s development cycle. The immense pressure to release OBBBA-compliant updates on a compressed timeline means vendors may be forced to cut corners on security testing. [6] A rushed patch could introduce buggy code that causes calculation errors, or worse, contain an insecure API that becomes a backdoor for attackers. Your team installs the “critical update” to stay compliant, unknowingly opening a new vulnerability on your network. [20]
• A Heavier Compliance Burden: Your obligations under the FTC Safeguards Rule and IRS Publication 4557 now apply to all this new data. A failure to properly secure VINs is now as serious as failing to secure a Social Security number. [7, 8, 15]

As Mark Luscombe of Wolters Kluwer Tax & Accounting notes, the administrative burden alone will strain firm resources. [6] Operational stress is a vulnerability in itself, making your team more susceptible to the phishing attacks that are rampant in our industry. [18]

Also Read: The Top 5 Security Gaps in Standard Cloud Hosting for Accountants

The Immediate Impact: How OBBBA Complicates Your Daily Operations

Beyond high-level strategy, OBBBA introduces immediate, tactical challenges that affect your firm’s day-to-day workflow. The combination of new data, ambiguous rules, and system pressures creates a minefield of operational and security risks.

Here’s what firms are grappling with today:

• New Client Intake Procedures: For any client claiming the new auto loan interest deduction, your intake process must now include collecting and verifying their vehicle’s Vehicle Identification Number (VIN). [1] Your standard client questionnaire needs to be updated, and your staff must be trained to request this new, highly sensitive data.
• Complex Payroll Data Analysis: To calculate the new overtime deduction, your team can no longer just look at the total overtime paid. They must now parse detailed payroll records to isolate the premium portion of overtime that qualifies under the Fair Labor Standards Act (FLSA), separating it from any overtime paid voluntarily or under state laws. [5] This requires a more sophisticated level of analysis for every client with hourly employees.
• The “Reasonable Methods” Liability Trap: The law’s retroactive start date forces firms to operate in a gray area. The Treasury’s advice to use “reasonable methods” for compliance until final rules are issued is dangerously vague. [6] What seems “reasonable” to your firm may not seem reasonable to an auditor or regulator after a breach has occurred. This ambiguity forces you to make a high-stakes judgment call on how to handle client data, creating a significant liability trap where your best guess could later be deemed negligent. [21]
• Client Communication Overload: Your phones are likely already ringing with clients asking how to take advantage of the new tip and overtime deductions. You’re now in the difficult position of providing advice on complex new rules before the IRS has issued its final guidance, balancing client service with professional liability. [5]

These immediate pressures aren’t just logistical headaches; they are active security risks. Every moment your team spends dealing with a confusing client question or a buggy software update is a moment not spent on securing your firm’s data.

Also Read: WISP for PTIN Renewal: A Step-by-Step Guide for Tax Preparers

How to Update Your WISP for the OBBBA Era

Your Written Information Security Plan (WISP) is the single most important document in your compliance arsenal. It is legally mandated by the FTC Safeguards Rule and the IRS, and it’s a prerequisite for renewing your PTIN. [8, 9, 15, 14]

Because OBBBA expands the scope of data you must protect, your current WISP is now incomplete. Here’s your checklist for updating it:

• Expand Your Risk Assessment: Your annual risk assessment must now specifically name and evaluate the threats to tip income, overtime pay, and auto loan data.
• Refine Your Access Controls: The principle of least privilege is more important than ever. Your WISP must now define who can access these new data types. For example, can staff processing W-2s see a client’s VIN? Your policy must be explicit, a key tenet of access control frameworks from NIST. [22]
• Verify Encryption Across All Data: Your plan must confirm that your encryption protocols (AES-256 at rest, TLS 1.2+ in transit) are being applied to these new data fields everywhere they live- on your server, in your backups, and in transit. [10, 16]
• Update Your Incident Response Scenarios: What is your specific plan if you discover that only tip income data has been breached? Your IRP must have clear protocols for these new scenarios, including how you will meet the FTC’s 30-day breach notification rule, as outlined in NIST’s incident handling guides. [11, 12, 28]
• Re-evaluate Vendor Management: Your WISP must now document how you are verifying that your payroll provider and other vendors can securely handle this new data. This includes reviewing their SOC 2 reports, a critical step in third-party risk management. [17, 23]

This is more than a paperwork exercise; it’s a critical strategic update. For firms that need guidance, our VeritShield WISP service provides an Expert-Guided WISP Buildout(TM). We provide the tailored templates, risk assessment guidance, and expert advice to help you build and maintain a WISP that is truly audit-ready.

The Danger of Shared Hosting in a Granular Data World

Many firms have historically used generic shared hosting or a basic Virtual Private Server (VPS) to save on costs. In the post-OBBBA world, that model is a liability waiting to happen. An infrastructure you don’t fully control is one you can’t truly secure.

The risks are straightforward:

• The “Noisy Neighbor” Problem & Resource Strain: On a shared server, a spike in another company’s activity can slow your applications to a crawl. This is compounded by OBBBA’s new requirements, which add significant strain on system resources. The complex calculations required to isolate overtime premiums, along with the larger databases needed to store new fields, will consume more processing power and memory. On a shared platform, this increased demand can lead to severe performance degradation precisely when you can least afford it. [24]
• Shared Vulnerabilities: You have no control over the security practices of other tenants. A breach on their side of the server could potentially create a vulnerability that affects your firm, a risk highlighted by the Cloud Security Alliance. [25]
• Lack of Isolation: Without true digital isolation, proving to an auditor that your data is properly segregated and protected is nearly impossible.

To properly secure this new, granular data, you need an environment built on isolation. Our VeritSpace private cloud provides your firm with a single-tenant, private Windows server. Our Dedicated-Isolation Architecture(TM) ensures your resources are never compromised, delivering the performance and security guarantees you need to meet your compliance obligations with confidence.

Also Read: Calculating the True Cost of IT Downtime for Accounting Firms

Why Your Security Strategy Must Extend to the Desktop

A secure server is only half the battle. Your biggest vulnerability is often an employee clicking a single malicious link in a phishing email. Your security strategy must extend from the data center to every desktop and laptop used by your staff.

The confusion surrounding OBBBA is a gift to cybercriminals, who can now craft highly specific and believable phishing lures. Imagine an email pretending to be from the IRS e-Services desk with the subject line “Action Required: OBBBA Overtime Calculation Verification,” containing a link to a fake portal designed to steal credentials. Or an email that appears to be from a major auto lender asking your staff to “confirm a client’s VIN” for the new tax deduction. These new data types create new, irresistible bait for phishing attacks.

This is where proactive, managed IT services become essential. A comprehensive service like VeritGuard provides the critical layers of endpoint protection you need:

• Endpoint Detection & Response (EDR): This goes beyond traditional antivirus to actively hunt for and neutralize threats like ransomware before they can cause damage, a strategy endorsed by CISA. [29]
• Automated Patch Management: We ensure the latest security patches for Windows and other critical applications are deployed automatically, closing vulnerabilities before they can be exploited. [20]
• 24/7 Expert Help Desk: Our support desk is staffed by technicians who are experts in tax and accounting software, ensuring your team gets fast, knowledgeable help when they need it.
• Cybersecurity Training: We provide ongoing training to help your staff recognize and avoid the latest phishing and social engineering tactics- including OBBBA-specific lures- turning your weakest link into a strong line of defense.

As the AICPA has stated, “firms must recognize that compliance is not a one-time project, but an ongoing operational commitment.” [4] VeritGuard is designed to manage that commitment for you.

Also Read: The ROI of Managed IT Services for Mid-Sized Accounting Firms

The Unified Solution: Simplifying Compliance in a Complex World

Juggling a separate hosting provider, an IT company, and a compliance consultant is a complex and inefficient process. When something goes wrong, vendors point fingers, and you’re left in the middle. [26]

A unified approach is simpler and more secure. Our VeritComplete solution bundles the dedicated hosting of VeritSpace with the proactive IT management of VeritGuard into a single, seamless package.

With VeritComplete, you get one partner, one predictable bill, and one team of experts accountable for your firm’s entire technology and security ecosystem.

Also Read: 5 Critical Questions to Ask Your Cloud Hosting Provider

Your First Step: A Focused Risk Assessment

The journey to full OBBBA readiness begins today with a single, crucial step: a formal risk assessment focused on the new data types.

1. Map the New Data: Identify every system and workflow that will touch tip, over time, and auto loan data.
2. Identify the New Vulnerabilities: Where are the weak points? An insecure API? A lack of access controls?
3. Update Your WISP: Document the new risks and the specific controls you are implementing to mitigate them.

This process must be led by your designated “Qualified Individual” as required by the FTC Safeguards Rule. [9, 10]

The OBBBA has raised the stakes for data security. By taking a strategic, proactive approach, grounded in a foundation of dedicated, isolated technology and guided by expert-managed security policies, your firm can navigate this transition with confidence. This isn’t just about avoiding penalties; it’s about reinforcing the trust that’s the foundation of your client relationships.

As a firm with two decades of specialized experience serving the tax and accounting industry, Verito is uniquely positioned to help you navigate these challenges. Our solutions are built on a foundation of SOC 2 Type II audited controls and are designed to meet the stringent requirements of IRS Publication 4557 and the FTC Safeguards Rule.

To discuss how your firm can build a secure and compliant technology strategy for the post-OBBBA era, we invite you to take the next step.

[Schedule Your Free VeritGuard Assessment] or [Get Your Free WISP Consultation]

You can also reach us directly at (800) 555-0123 or [email protected].

References

[1] U.S. Congress. (2025). H.R. 1 – To provide for reconciliation pursuant to title II of H. Con. Res. 14. Retrieved from https://www.congress.gov/bill/119th-congress/house-bill/1

[2] WilmerHale. (2025). Understanding the One Big Beautiful Bill Act’s Impact on Regulated Industries. Retrieved from https://www.wilmerhale.com/insights/client-alerts/20250710-understanding-the-obbba-impact

[3] Committee for a Responsible Federal Budget. (2025). Analysis of the One Big Beautiful Bill Act. Retrieved from https://www.crfb.org/blogs/analysis-one-big-beautiful-bill-act

[4] Accounting Today. (2025). Dissecting the OBBBA: A Guide for Accountants. Retrieved from https://www.accountingtoday.com/news/dissecting-the-obbba-a-guide-for-accountants

[5] Tax Foundation. (2025). Analysis of the Tax Provisions in the One Big Beautiful Bill Act. Retrieved from https://taxfoundation.org/research/all/federal-tax/obbba-tax-provisions/

[6] CPA Practice Advisor. (2025). OBBBA Creates Major Implementation Hurdles for Tax Pros. Retrieved from https://www.cpapracticeadvisor.com/2025/07/08/obbba-implementation-hurdles/

[7] Federal Trade Commission. (n.d.). FTC Safeguards Rule: What Your Business Needs to Know. Retrieved from https://www.ftc.gov/business-guidance/resources/ftc-safeguards-rule-what-your-business-needs-know

[8] Lathrop GPM. (2024). New Tax Act Imposes Unseen Cybersecurity Burdens. Retrieved from https://www.lathropgpm.com/insights/2024/09/new-tax-act-cybersecurity-burdens

[9] Federal Register. (2023). Standards for Safeguarding Customer Information. Retrieved from https://www.federalregister.gov/documents/2023/11/09/2023-24523/standards-for-safeguarding-customer-information

[10] Manatt. (2023). FTC Finalizes Amendments to the Safeguards Rule. Retrieved from https://www.manatt.com/insights/newsletters/financial-services-law/ftc-finalizes-amendments-to-the-safeguards-rule

[11] Federal Trade Commission. (2023). FTC Strengthens Safeguards Rule to Require Reporting of Data Breaches. Retrieved from https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc-strengthens-safeguards-rule-require-reporting-data-breaches

[12] The National Law Review. (2023). FTC Amends Safeguards Rule to Require Breach Notification. Retrieved from https://www.natlawreview.com/article/ftc-amends-safeguards-rule-to-require-breach-notification

[13] Internal Revenue Service. (2024). IRS Security Summit. Retrieved from https://www.irs.gov/privacy-disclosure/security-summit

[14] Drake Software. (2024). Security Summit Series: The Principle of Least Privilege. Retrieved from https://www.drakesoftware.com/resources/security-summit-least-privilege/

[15] Internal Revenue Service. (2024). Publication 4557, Safeguarding Taxpayer Data. Retrieved from https://www.irs.gov/pub/irs-pdf/p4557.pdf

[16] NIST. (2012). SP 800-61 Rev. 2, Computer Security Incident Handling Guide. Retrieved from https://csrc.nist.gov/publications/detail/sp/800-61/rev-2/final

[17] The Tax Adviser. (2024). Managing Vendor Risk in an Era of Heightened Regulation. Retrieved from https://www.thetaxadviser.com/issues/2024/jul/managing-vendor-risk.html

[18] Verizon. (2024). 2024 Data Breach Investigations Report. Retrieved from https://www.verizon.com/business/resources/reports/dbir/

[19] SANS Institute. (2024). The Intersection of Data and Deception: New Social Engineering Vectors. Retrieved from https://www.sans.org/white-papers/4012/

[20] CISA. (2024). Alert (AA24-052A): Mitigating Risks from Insecure Software Updates. Retrieved from https://www.cisa.gov/news-events/cybersecurity-advisories/aa24-052a

[21] Journal of Accountancy. (2025). Navigating “Reasonable Method” Compliance Under New Tax Law. Retrieved from https://www.journalofaccountancy.com/news/2025/aug/navigating-reasonable-method-compliance.html

[22] NIST. (2021). SP 800-53 Rev. 5, Security and Privacy Controls for Information Systems and Organizations. Retrieved from https://csrc.nist.gov/publications/detail/sp/800-53/rev-5/final

[23] AICPA. (2022). SOC for Service Organizations: A Guide for Service Organizations. Retrieved from https://us.aicpa.org/interestareas/frc/assuranceadvisoryservices/soc-for-service-organizations

[24] TechTarget. (2023). Understanding the ‘Noisy Neighbor’ Problem in Cloud Computing. Retrieved from https://www.techtarget.com/searchcloudcomputing/definition/noisy-neighbor-cloud-computing

[25] Cloud Security Alliance. (2024). Top Threats to Cloud Computing: The Egregious 11. Retrieved from https://cloudsecurityalliance.org/research/artifacts/top-threats-to-cloud-computing-the-egregious-11/

[26] Harvard Business Review. (2023). The Hidden Costs of a Fragmented IT Vendor Portfolio. Retrieved from https://hbr.org/2023/09/the-hidden-costs-of-a-fragmented-it-vendor-portfolio

[27] NIST. (2012). SP 800-61 Rev. 2, Computer Security Incident Handling Guide. Retrieved from https://csrc.nist.gov/publications/detail/sp/800-61/rev-2/final

[28] CISA. (n.d.). Endpoint Detection and Response (EDR). Cybersecurity & Infrastructure Security Agency. Retrieved from https://www.cisa.gov/edr