What You Must Know About Identity Theft and the IRS
Over the last several years, income tax preparers have seen a significant rise in the number of returns filed that involve identity theft issues....
Tax identity theft may seem like a problem only for individual taxpayers. But, according to the IRS, increasingly businesses are also becoming victims. And identity thieves have become more sophisticated, knowing filing practices, the tax code and the best ways to get valuable data.
How it works
In tax identity theft, a taxpayer’s identifying information (such as Social Security number) is used to fraudulently obtain a refund or commit other crimes. Business tax identity theft occurs when a criminal uses the identifying information of a business to obtain tax benefits or to enable individual tax identity theft schemes.
For example, a thief could use an Employer Identification Number (EIN) to file a fraudulent business tax return and claim a refund. Or a fraudster may report income and withholding for fake employees on false W-2 forms. Then, he or she can file fraudulent individual tax returns for these “employees” to claim refunds.
The consequences can include significant dollar amounts, lost time sorting out the mess and damage to your reputation.
Red flags
There are some red flags that indicate possible tax identity theft. For example, your business’s identity may have been compromised if:
Keep in mind, though, that some of these could be the result of a simple error, such as an inadvertent transposition of numbers. Nevertheless, you should contact the IRS immediately if you receive any notices or letters from the agency that you believe might indicate that someone has fraudulently used your Employer Identification Number.
Prevention tips
Businesses should take steps such as the following to protect their own information as well as that of their employees:
Of course identity theft can go beyond tax identity theft, so be sure to have a comprehensive plan in place to protect the data of your business, your employees and your customers. If you’re concerned your business has become a victim, or you have questions about prevention, please contact us at 1.866.287.9604.
© 2018
Over the last several years, income tax preparers have seen a significant rise in the number of returns filed that involve identity theft issues....
1 min read
The IP PIN Opt-In program was launched nearly a decade ago to protect confirmed identity theft victims from ongoing tax-related fraud. Recently, the...
A new tax identity theft scam has popped up in 2018. The IRS is alerting taxpayers of this new refund scam where criminals are having incorrect...