Many people are aware that they need to guard their personal information from identity thieves. However, as people lock down their personal information, fraudsters have acquired a new target: small businesses.
Using compromised tax information, scammers can steal small business’s tax refunds or even use that data to commit other financial crimes. Most commonly, people will attempt to use a company’s Employer Identification Number (EIN) and file a return to claim a refund.
It’s important to be on the lookout for signs that someone has tried to file a fraudulent return:
For example, if you try to file yourself and get a rejection from the IRS that a return has already been filed, you should quickly investigate further because it could be a sign of fraud.
You might also receive an unexpected receipt or IRS notice that isn’t related to anything you have submitted.
Also, if you have submitted something and are expecting a response but don’t receive one, it might mean that a scammer has changed your business’ address with the IRS without you knowing.
And, the risks of having your EIN or other business data out aren’t just for the business, but this information can also be used to perform phishing schemes (where someone pretends to be someone else to gain personal information) on employees.
In order to protect your business from tax identity fraud, it’s suggested that you file a return or a request for an extension as soon as possible during the filing season. That way, the IRS will have your information before any scammers could attempt to use it.
Additionally, if you have a tax professional who helps your business file taxes, you should discuss current cybersecurity practices with them. Some CPA firms, for instance, have undergone training and received a cybersecurity advisory services certificate that indicates an ability to help clients meet security needs while protecting client data.
It’s also important to keep in mind the tips you already know for protecting your personal information and apply them to your business. Be careful about responding to phone calls or emails that claim to be from the IRS, and always verify the message is valid. Remember, the IRS will never ask for financial information in a phone call or email.
By keeping vigilant, you can keep your business safe from tax identity theft.