WISP requirements for tax preparers in Colorado
If your firm prepares tax returns or handles customer financial information in Colorado, the written plan itself is federal. 16 CFR 314.3(a) requires a comprehensive information security program written in one or more readily accessible parts, and it has no small-firm exemption. Colorado does not issue its own WISP. What Colorado adds is a breach-notification layer that decides who you have to tell, and how fast, if customer information gets out.
Key facts
- The WISP itself is required of Colorado firms at any size: 16 CFR 314.3(a) has no consumer-count exemption.
- Under 5,000 consumers, 16 CFR 314.6 does lift four duties, including the written incident response plan at 314.4(h). It does not lift the plan.
- Most expedient time possible, without unreasonable delay, and within 30 days after the date of determination that a security breach occurred; AG notice for 500+ residents follows the same 30-day outer limit.
Key takeaways
- Notify the Colorado Attorney General if the breach is reasonably believed to affect 500 or more Colorado residents.
- The WISP should preserve evidence, remediation steps, and annual review records.
Do Colorado tax preparers need a WISP?
Yes, if they are covered by the FTC Safeguards Rule or IRS tax-data security expectations, they should maintain a written plan. Colorado state breach-notice duties make incident planning especially important.
The WISP should start with federal obligations because the Safeguards Rule supplies the security-program structure.
Colorado requires a prompt, good-faith investigation into likely misuse; notice to the Attorney General is required when a breach is reasonably believed to affect 500 or more Colorado residents, and consumer reporting agencies must be notified when more than 1,000 residents are notified unless an exception applies.
What is specific to Colorado?
Most expedient time possible, without unreasonable delay, and within 30 days after the date of determination that a security breach occurred; AG notice for 500+ residents follows the same 30-day outer limit. The plan should identify who evaluates state notice, who contacts counsel, and where the decision record is kept.
Colorado is a short-clock breach-notice state. A Policywright incident file for Colorado should track the date of determination, the misuse analysis, whether the 500-resident Attorney General threshold is met, whether the 1,000-resident consumer-reporting-agency threshold is met, and any law-enforcement or restoration delay.
State breach-notification law does not replace the Safeguards Rule. It adds a state-specific response layer when an incident affects Colorado residents.
Affected Colorado residents unless a prompt, good-faith investigation determines misuse has not occurred and is not reasonably likely to occur.
Notify the Colorado Attorney General if the breach is reasonably believed to affect 500 or more Colorado residents.
What should the WISP say?
It should describe real safeguards, assign responsibility, map vendors and systems, and include an incident-response path that reaches state-law review quickly.
For a small firm, the strongest plan is plain and evidence-backed: MFA records, backup tests, access reviews, training, vendor lists, and remediation dates.
The plan should never promise a control that is not actually in place.
| Topic | Colorado planning note | Evidence |
|---|---|---|
| Federal WISP | Use 16 CFR Part 314 as the program backbone | WISP and annual review |
| IRS tax data | Account for taxpayer records, PTIN practice, portals, and e-file workflows | System inventory and access list |
| Breach notice | Most expedient time possible, without unreasonable delay, and within 30 days after the date of determination that a security breach occurred; AG notice for 500+ residents follows the same 30-day outer limit. | Incident clock and counsel review record |
| Regulator path | Notify the Colorado Attorney General if the breach is reasonably believed to affect 500 or more Colorado residents. | Notification decision log |
| State statute | Colo. Rev. Stat. § 6-1-716 | Source URL retained in page sources |
FAQ
Is this legal advice?
No. Policywright is a documentation product, not a law firm, and nothing here is legal advice. A qualified lawyer should review state-law reliance or breach-notification decisions.
Does a small firm still need a written plan?
Yes. The Safeguards Rule requires a written information security program for covered financial institutions, and IRS guidance tells paid tax preparers to maintain a written data security plan.
What if a control is not in place yet?
A serious WISP should not pretend. It should identify the gap, assign an owner, set a target date, and preserve a dated remediation record.
Does Colorado have its own WISP law?
This page does not claim a standalone Colorado WISP statute for every firm. It explains how federal WISP duties should be paired with Colorado breach-notification planning.
Who reviews Colorado breach notice?
The incident plan should route state-law decisions through qualified counsel and preserve any Colorado Attorney General regulator-notice analysis.
Sources
- FTC Safeguards Rule, 16 CFR Part 314 (eCFR)
- FTC, Safeguards Rule: What Your Business Needs to Know
- FTC, Safeguards Rule notification requirement now in effect (16 CFR 314.4(j), eff. May 13, 2024)
- IRS Publication 5708, Creating a Written Information Security Plan
- IRS Publication 4557, Safeguarding Taxpayer Data
- IRS Form W-12, PTIN Application and Renewal
- IRS Publication 1345, Handbook for Authorized IRS e-file Providers
- Colorado Attorney General consumer data protection laws FAQ
- Colorado Attorney General data breach reporting form
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