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How to guard against W-2 and identity theft scams

The IRS recently warned small businesses to be on the guard against tax-related scams. Cybercriminals continue to look for new ways to access sensitive identifying information.

Businesses, as well as individuals, can fall prey to identity theft. For example, a stolen Employer Identification Number (EIN) can be used to open a new line of credit or file a fraudulent return.

Red flags that require action

The service has noted an increase in fraudulent partnership and estate and trust forms too. Some signs that businesses, partnerships and estate and trust filers should be aware of include:

  • A request for an extension to file or an e-filed return is rejected because there was already a return filed under the EIN/duplicate EIN on file
  • Unexpected tax transcripts – we wrote about a variation of this scam in our November blog post
  • Expected routine correspondence from the IRS never arrives.

Contact the IRS immediately in these situations, because a scammer may have filed a return or changed an address.

Schemes targeting employee identification information

Email spoofing scams appearing to be from an executive or leader of payroll have tricked numerous human resource employees. These breaches can go undetected for some time because those in payroll believe they are simply corresponding with another employee in the organization.

Businesses need to put in place protocols when it comes to sharing sensitive employee information. The IRS recommends a two employees review process or an oral confirmation before emailing W-2s or other sensitive data.

This W-2 data loss has been so prevalent that the IRS has set up a specific email: [email protected] A business or payroll service can also file a complaint with the FBI’s Internet Crime Complaint Center (IC3.gov). Scam emails can be reported to the IRS at [email protected]

Criminals looking for ways to access sensitive information do not take a break over the holidays. They may even target employees who may be more distracted or trying to get everything finished before taking off time at the end of the year.

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