Worried about tax scams targeting your business? You're not alone. Many business owners share this concern, especially during tax season when fraudulent activities peak. Scammers are becoming increasingly sophisticated, making it crucial for you to stay informed and vigilant.
To address this issue, the IRS has developed a one-page flyer to raise awareness of tax scams and provide guidance on prevention. Publication 5961, titled "Protect Your Business From Tax Scams," was released as part of the IRS’s National Small Business Week initiative.
The IRS reports that small businesses continue encountering various financial and identity theft-related schemes designed to steal information for filing fraudulent tax returns, draining business bank accounts, and creating stolen identities.
Small business owners and employees should be aware of these scams and take steps to protect themselves. The IRS flyer outlines red flags to watch for, such as unsolicited calls, emails, or visits from someone claiming to be from the IRS. It also provides tips on verifying the legitimacy of IRS contacts and reporting suspected scams.
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In this article, you will learn practical steps to protect your business from tax scams, identify common types of scams, and discover what to do if you suspect fraud. By the end, you'll have the knowledge and confidence to safeguard your business's well-being.
Table of Contents
One of the most prevalent tax scams involves fraudulent requests for W-2 forms. Scammers often pose as company executives or other trusted individuals to trick employees into providing sensitive information. These fake requests can come through emails that look legitimate but have subtle differences in email addresses or domain names.
Tips to Protect Your Business
Social media can be a breeding ground for misleading tax advice. Scammers may use platforms like Facebook, Twitter, or Instagram to spread false information. They might encourage you to:
Tips To Protect Your Business
Quick Tip Signs of Identity Theft!
Rejected extension request due to duplicate EIN/SSN
Unexpected tax documents
IRS notices about discrepancies (Letters 6042C or 5263C)
Missing IRS communication (possibly due to address change)
Phishing emails are fraudulent messages that appear to come from legitimate sources, such as the IRS or other trusted entities. These emails often contain links or attachments designed to steal personal information or infect your computer with malware.
Red Flags to Watch Out For
Real IRS Correspondence
Phone scams involve fraudsters impersonating IRS agents and demanding immediate payment of taxes. They often use threats of legal action, arrest, or business closure to create a sense of urgency.
Red Flags to Watch Out For
Real IRS Correspondence
Scammers may send fraudulent letters that look like official IRS correspondence. These letters often include a bogus phone number or website, directing you to provide personal information or make a payment.
Red Flags to Watch Out For
Real IRS Correspondence
You can find a full list of tax and consumer scams here.
Tips for Verifying Authenticity
Tip 1: Always cross-reference any contact information or instructions with the official IRS website (www.irs.gov) to ensure they are legitimate.
Tip 2: If you receive a suspicious letter, email, or phone call, contact the IRS directly using the phone numbers provided on their official website. Do not use the contact information provided in the suspicious communication.
Tip 3: Genuine IRS communications will contain specific information about your tax situation, such as your account number and tax filing details. Generic or vague messages are a red flag.
Protecting your business from tax scams requires a proactive approach. By implementing the following best practices and preventive measures, you can significantly reduce the risk of falling victim to fraud.
Safeguarding your Employer Identification Number (EIN) is vital for your business's security. Keep it confidential and ensure the IRS has your current contact information on file. Securely store your EIN documents and restrict access to them (be sure to regularly update your EIN details with the IRS using Form 8822-B if your business structure or contact information changes).
Be vigilant and report any unauthorized EIN use to the IRS immediately. When storing sensitive financial and tax information on computers and servers, utilize robust encryption methods. Grant access to this sensitive data only to authorized employees and enforce strong, unique passwords that are updated regularly.
Maintain your business's cybersecurity by installing and updating firewalls and anti-malware software, and keep all software and systems patched with the latest security updates to minimize vulnerabilities.
If you suspect your business has been targeted by a tax scam, it is crucial to act quickly and effectively. Here are the steps you should take to address the situation and minimize any potential damage.
If you receive a suspicious phone call, hang up immediately. Do not provide any personal or financial information. Report the call to the Treasury Inspector General for Tax Administration (TIGTA) by calling 1-800-366-4484 or using their online form. You can also forward any suspicious emails to phishing@irs.gov. Do not open any attachments or click on any links in the email.
If you suspect your business identity has been stolen, complete IRS Form 14039-B (Business Identity Theft Affidavit). Submit this form to the IRS to alert them of the identity theft and prevent further misuse of your information.
It's important to report scams to the appropriate authorities. You can report most scams to the Federal Trade Commission (FTC) at https://www.ftc.gov/media/71268. This helps them track fraudulent activities and potentially investigate them.
For scams related to the IRS, Treasury, or taxes specifically, there are separate reporting channels. If you encounter phishing attempts claiming to be from these entities, report them to phishing@irs.gov. In case of a W-2 scam that resulted in data loss, email dataloss@irs.gov with "W2 Data Loss" in the subject line. Be sure to include your contact information, but avoid including any employee's personal details.
Finally, if you suspect a W-2 or other identity information disclosure, notify your state by emailing StateAlert@taxadmin.org. Remember to always use the contact information provided on the official IRS website when reaching out to report scams or seek assistance. This ensures that you are communicating with legitimate representatives. Lastly, keep a detailed record of all communications related to the scam, including emails, letters, and phone calls. Note down dates, times, and the names of any individuals you speak with.
Protecting your business from tax scams requires vigilance, education, and swift action. By staying informed about common scams, safeguarding sensitive information, and reporting any suspicious activity promptly, you can minimize the risk of falling victim to fraudsters.
Remember to verify all IRS communications, educate your team, and take proactive steps to secure your business's information. If you suspect a tax scam, follow the recommended steps to address the situation effectively. By taking these precautions, you can strengthen your business against potential threats and ensure a secure financial future. Stay informed, stay vigilant, and protect your business from tax scams!