{"id":8046,"date":"2026-08-28T06:26:00","date_gmt":"2026-08-28T10:26:00","guid":{"rendered":"https:\/\/verito.com\/blog\/?p=8046"},"modified":"2026-10-12T12:41:06","modified_gmt":"2026-10-12T16:41:06","slug":"state-privacy-laws-multi-state-accounting-firms","status":"publish","type":"post","link":"https:\/\/verito.com\/blog\/state-privacy-laws-multi-state-accounting-firms\/","title":{"rendered":"State Privacy Laws for Accounting Firms: Applicability and Exemptions"},"content":{"rendered":"\n<p><strong>An accounting firm does not automatically become subject to every comprehensive privacy law in every state where a client lives. Client residence is a useful starting point, but each law has its own scope, thresholds, exemptions, and rules for the information involved.<\/strong><\/p>\n\n\n\n<p>The firm needs a targeted applicability review and a data inventory. A current WISP helps document security practices; it does not by itself answer every state privacy or breach-notification question.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Key takeaways<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Client residence alone is not a complete state privacy-law applicability test.<\/li>\n\n\n\n<li>Read each law&#8217;s scope, thresholds and exemptions for the firm&#8217;s actual activities.<\/li>\n\n\n\n<li>Distinguish exemptions for an entity from exemptions for particular information.<\/li>\n\n\n\n<li>A <a class=\"wpil_keyword_link\" href=\"http:\/\/verito.com\/written-information-security-plan\" target=\"_blank\"  rel=\"dofollow noopener\" title=\"WISP\" data-wpil-keyword-link=\"linked\"  data-wpil-monitor-id=\"1392\">WISP<\/a> documents security work but does not settle all privacy rights or breach duties.<\/li>\n<\/ul>\n<\/blockquote>\n\n\n\n<div class=\"wp-block-rank-math-toc-block\" id=\"rank-math-toc\"><h2 id=\"table-of-contents\">Table of Contents<\/h2><nav><ul><li><a href=\"#what-is-the-same-for-your-firm-in-every-state\">What should the applicability review establish?<\/a><\/li><li><a href=\"#why-do-glba-exemptions-need-careful-reading\">Why do GLBA exemptions need careful reading?<\/a><\/li><li><a href=\"#three-examples-of-different-applicability-approaches\">Three examples of different applicability approaches<\/a><ul><li><a href=\"#california-assess-the-business-and-the-information\">California: Assess the business and the information<\/a><\/li><li><a href=\"#colorado-review-consumer-scope-and-statutory-exemptions\">Colorado: Review consumer scope and statutory exemptions<\/a><\/li><li><a href=\"#virginia-check-the-chapters-scope-and-financial-exemption\">Virginia: Check the chapter&#8217;s scope and financial exemption<\/a><\/li><\/ul><\/li><li><a href=\"#build-an-inventory-that-makes-the-review-possible\">Build an inventory that makes the review possible<\/a><\/li><li><a href=\"#does-a-privacy-exemption-settle-breach-notification-duties\">Does a privacy exemption settle breach-notification duties?<\/a><\/li><li><a href=\"#how-does-this-review-differ-from-the-ftc-safeguards-rule\">How does this review differ from the FTC Safeguards Rule?<\/a><\/li><li><a href=\"#what-should-a-privacy-request-process-include\">What should a privacy-request process include?<\/a><\/li><li><a href=\"#how-verito-helps-implement-the-firms-security-decisions\">How Verito helps implement the firm&#8217;s security decisions<\/a><\/li><li><a href=\"#sources\">Sources<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-is-the-same-for-your-firm-in-every-state\"><span id=\"what-should-the-applicability-review-establish\">What should the applicability review establish?<\/span><\/h2>\n\n\n\n<p>For each relevant state, ask whether the firm meets the statutory business or activity conditions, what information it processes, and whether an entity-level or data-level exemption applies.<\/p>\n\n\n\n<p>Review the role the firm plays. It may determine how information is processed for one activity while providing services under another business&#8217;s instructions for a different activity.<\/p>\n\n\n\n<p>Include records beyond tax returns: website inquiries, marketing contacts, employee files, applicant information, and vendor contacts can require separate analysis.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-1024x576.jpg\" alt=\"Service provider oversight for client data cinematic visual | Verito\" class=\"wp-image-8070\" srcset=\"https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-1024x576.jpg 1024w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-300x169.jpg 300w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-768x432.jpg 768w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-1536x864.jpg 1536w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-380x214.jpg 380w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-800x450.jpg 800w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-1160x653.jpg 1160w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight-150x84.jpg 150w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-oversight.jpg 1920w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>The answer should identify the law and reasoning, rather than simply label the entire client database \u201cfinancial data.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"why-do-glba-exemptions-need-careful-reading\">Why do GLBA exemptions need careful reading?<\/h2>\n\n\n\n<p>The Gramm-Leach-Bliley Act is relevant to the analysis, but state exemptions are not written identically.<\/p>\n\n\n\n<p>An entity-level exemption can remove a qualifying institution from a law&#8217;s scope. A data-level exemption can apply only to particular information or processing, leaving other records to be assessed.<\/p>\n\n\n\n<p>That difference matters when an accounting firm handles both regulated client information and other personal information. Do not extend an exemption beyond the statute&#8217;s wording or assume every accounting service has identical treatment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"three-examples-of-different-applicability-approaches\">Three examples of different applicability approaches<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"california-assess-the-business-and-the-information\">California: Assess the business and the information<\/h3>\n\n\n\n<p>The <a href=\"https:\/\/cppa.ca.gov\/faq.html\" target=\"_blank\" rel=\"nofollow noopener\">California Privacy Protection Agency&#8217;s FAQ<\/a> describes covered for-profit businesses and alternative revenue, information-volume, and revenue-from-selling-or-sharing thresholds. Having a California client alone is not the complete test.<\/p>\n\n\n\n<p>The CPPA also describes financial-data exemptions in its <a href=\"https:\/\/cppa.ca.gov\/pdf\/business_comply.pdf\" target=\"_blank\" rel=\"nofollow noopener\">business applicability guidance<\/a>. Assess what information is processed under the relevant financial-privacy rules rather than treating the exemption as an automatic exclusion of every record held by the firm.<\/p>\n\n\n\n<p>Employee, applicant, and business-contact information should not be ignored: the CPPA explains that California residents in those contexts can have CCPA rights.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"colorado-review-consumer-scope-and-statutory-exemptions\">Colorado: Review consumer scope and statutory exemptions<\/h3>\n\n\n\n<p>The <a href=\"https:\/\/coag.gov\/resources\/colorado-privacy-act\/\" target=\"_blank\" rel=\"nofollow noopener\">Colorado Attorney General&#8217;s privacy guidance<\/a> distinguishes individual or household contexts from employment and business contexts.<\/p>\n\n\n\n<p>Colorado&#8217;s statute also contains a financial-institution exemption with specific conditions. Review those conditions and the firm&#8217;s activities rather than transplanting the California analysis.<\/p>\n\n\n\n<p>The definition of a consumer can affect which records count toward applicability. A count of all names in the firm&#8217;s systems is not necessarily the relevant statutory count.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"virginia-check-the-chapters-scope-and-financial-exemption\">Virginia: Check the chapter&#8217;s scope and financial exemption<\/h3>\n\n\n\n<p><a href=\"https:\/\/law.lis.virginia.gov\/vacode\/title59.1\/chapter53\/section59.1-576\/\" target=\"_blank\" rel=\"nofollow noopener\">Virginia Code \u00a759.1-576<\/a> sets activity and consumer-volume conditions and provides an exemption for financial institutions or data subject to Title V of GLBA.<\/p>\n\n\n\n<p>Document why the exemption does or does not apply to the firm or information being assessed. Its wording differs from a generic statement that all state privacy laws are layered onto a WISP.<\/p>\n\n\n\n<p>These examples show why a firm-specific review is more useful than a headline count of states with privacy laws.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-1024x576.jpg\" alt=\"Client residency privacy exposure map cinematic visual | Verito\" class=\"wp-image-8068\" srcset=\"https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-1024x576.jpg 1024w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-300x169.jpg 300w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-768x432.jpg 768w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-1536x864.jpg 1536w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-380x214.jpg 380w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-800x450.jpg 800w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-1160x653.jpg 1160w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency-150x84.jpg 150w, https:\/\/verito.com\/blog\/wp-content\/uploads\/2026\/08\/state-privacy-laws-multi-state-accounting-firms-residency.jpg 1920w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"build-an-inventory-that-makes-the-review-possible\">Build an inventory that makes the review possible<\/h2>\n\n\n\n<p>Start with systems and activities, not just offices:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Tax preparation and bookkeeping records.<\/li>\n\n\n\n<li>Client portals, email, and shared document locations.<\/li>\n\n\n\n<li>Website forms, analytics, and marketing tools.<\/li>\n\n\n\n<li>Staff and applicant records.<\/li>\n\n\n\n<li>Outsourced work, vendors, and their permitted access.<\/li>\n\n\n\n<li>Backups, archives, and local downloaded copies.<\/li>\n<\/ul>\n\n\n\n<p>Record information categories, relevant locations, purposes, recipients, retention, and a responsible owner. Use accurate working categories so the reviewer can identify exemptions and duties without receiving unnecessary personal details.<\/p>\n\n\n\n<p>Update the inventory after a merger, new service, new vendor, or material change in how information is used.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"does-a-privacy-exemption-settle-breach-notification-duties\">Does a privacy exemption settle breach-notification duties?<\/h2>\n\n\n\n<p>No automatic conclusion follows. Comprehensive privacy laws and breach-notification rules are different legal questions.<\/p>\n\n\n\n<p>The response review should identify the applicable information definitions, affected individuals, event facts, notice recipients, and deadlines. Federal requirements, state duties, contracts, and insurer conditions may also need attention.<\/p>\n\n\n\n<p>Use the <a href=\"https:\/\/verito.com\/blog\/breach-tabletop-exercise-tax-firm\/\" target=\"_blank\" rel=\"dofollow\">breach tabletop guide<\/a> to rehearse who gathers those facts and who obtains the legal assessment. Avoid assuming that one federal deadline applies to every incident.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-does-this-review-differ-from-the-ftc-safeguards-rule\">How does this review differ from the FTC Safeguards Rule?<\/h2>\n\n\n\n<p>The FTC Safeguards Rule addresses a covered financial institution&#8217;s information security program. State comprehensive privacy laws can address different questions, including the circumstances in which personal information is processed and the rights that apply to it.<\/p>\n\n\n\n<p>Coordinate the reviews through the same data inventory, but record the conclusions separately. A security control can support both activities without proving that every state privacy duty has been met. Keep a clear owner for legal applicability and another for implementing the approved technical controls.<\/p>\n\n\n\n<p>For the wider security-program context, read <a href=\"https:\/\/verito.com\/ftc-safeguards-rule\/\" target=\"_blank\" rel=\"dofollow\">Verito&#8217;s FTC Safeguards Rule guide<\/a> alongside the official FTC guidance in Sources.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-should-a-privacy-request-process-include\">What should a privacy-request process include?<\/h2>\n\n\n\n<p>Give staff a defined route for requests concerning access, correction, deletion, or other applicable rights. The reviewer should determine whether a right applies and any exception affecting the response.<\/p>\n\n\n\n<p>Verify identity appropriately before sending records. Do not collect excessive new sensitive information merely to process a request.<\/p>\n\n\n\n<p>Track receipt, the applicable response requirement, decisions, and completion. A deletion request should not prompt an employee to remove records that must be retained without review.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<figure class=\"wp-block-pullquote\"><blockquote><p><em>&#8220;I use Verito to host Drake Accounting, Drake Tax, and TaxDome &#8230; Everything runs smoothly, and the performance is exactly what I need for my tax practice. As a tax professional, reliability and security are everything, and Verito has delivered both perfectly.&#8221;<\/em><\/p><cite>Crystal Gilbert \u00b7 Google, Dec 2025<\/cite><\/blockquote><\/figure>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-verito-helps-implement-the-firms-security-decisions\">How Verito helps implement the firm&#8217;s security decisions<\/h2>\n\n\n\n<p><a href=\"https:\/\/verito.com\/buy-wisp\/\" target=\"_blank\" rel=\"dofollow\">Verito&#8217;s WISP services<\/a> can support documentation of the firm&#8217;s security program. Bring the data inventory and the decisions from the applicability review so the document reflects the actual workflow.<\/p>\n\n\n\n<p><a href=\"https:\/\/verito.com\/managed-it\/\" target=\"_blank\" rel=\"dofollow\">VeritGuard managed IT<\/a> is relevant to implementing and maintaining technical controls within the agreed scope. Ask who owns account access, device protection, and evidence needed for the firm&#8217;s reviews.<\/p>\n\n\n\n<p>Those services support the security work. The state-law assessment and any privacy-notice or rights-response decisions should be made by the appropriate reviewer for the firm&#8217;s circumstances.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"sources\">Sources<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.ftc.gov\/business-guidance\/resources\/ftc-safeguards-rule-what-your-business-needs-know\" target=\"_blank\" rel=\"nofollow noopener\">FTC: Safeguards Rule guidance<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/cppa.ca.gov\/faq.html\" target=\"_blank\" rel=\"nofollow noopener\">CPPA: Frequently asked questions<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/cppa.ca.gov\/pdf\/business_comply.pdf\" target=\"_blank\" rel=\"nofollow noopener\">CPPA: Does my business need to comply with the CCPA?<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/coag.gov\/resources\/colorado-privacy-act\/\" target=\"_blank\" rel=\"nofollow noopener\">Colorado Attorney General: Colorado Privacy Act<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/coag.gov\/app\/uploads\/2022\/01\/SB-21-190-CPA_Final.pdf\" target=\"_blank\" rel=\"nofollow noopener\">Colorado: Privacy Act statutory text<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/law.lis.virginia.gov\/vacode\/title59.1\/chapter53\/section59.1-576\/\" target=\"_blank\" rel=\"nofollow noopener\">Virginia Code: Scope and exemptions<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"An accounting firm does not automatically become subject to every comprehensive privacy law in every state where a&hellip;\n","protected":false},"author":12,"featured_media":8063,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-8046","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-knowledge-base"},"acf":[],"_links":{"self":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts\/8046","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/comments?post=8046"}],"version-history":[{"count":5,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts\/8046\/revisions"}],"predecessor-version":[{"id":8462,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/posts\/8046\/revisions\/8462"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/media\/8063"}],"wp:attachment":[{"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/media?parent=8046"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/categories?post=8046"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/verito.com\/blog\/wp-json\/wp\/v2\/tags?post=8046"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}