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Wed, August 23, 2017 Twitter LinkedIn

Compliance Training Blog

Security is everyone's responsibility

Tax Scams & Identity Theft

As the filing deadline for taxes approaches Monday, businesses and individuals are both at a risk of fraudsters targeting them, posing as the Internal Revenue Service. Avoid being scammed out of your money and your identity this tax season by being aware of the types of scams used to target honest taxpayers.


Return Preparer Fraud

According to the IRS, while most tax professionals are honest, there are some who are not. These fraudsters set up shop with the intent to perpetrate refund fraud, identity theft, and other scams that affect taxpayers.

One scam that was used by clients of a Virginia tax preparer involved victims unknowingly signing phony Schedule C forms to claim business losses. The tax preparer had the refunds deposited into an account they controlled, and wrote a check to the taxpayers for a fraction of the amount.

Keep in mind that even when using a tax preparer, you, as the taxpayer, are legally responsible for making sure your return is filed completely and accurately. Follow these tips to stay protected:

  • Always shop around for a tax professional who has a positive history in the community. Referrals by satisfied friends, family or other business owners is typically a safe route to go.
  • If a tax preparer asks you to sign a blank return and promises a big refund before looking at your records, or charge fees based on a percentage of your refund, you should walk away immediately. Never sign a blank return, and negotiate a flat fee.
  • Check for a Tax Preparer Identification Number. The IRS issues these numbers to all paid preparers. A lack of a PTIN is a sign of a shady preparer.
  • Never agree to have your return deposited into an account controlled by the tax preparer. This is a very easy way for scammers to skim from your refund.

Tax Scams

Here are a few ways that scammers utilize tax season and the IRS to get key identifying information:

  • Scam phone calls are made impersonating IRS agents. This phishing technique intimidates victims into sharing business financial information such as employee I.D. numbers to use for illicit purposes. Threats like arrest and having your business license revoked are used.
  • Phishing emails leading you to phony websites are commonly used. Scam artists can design incredibly realistic-looking websites to steal your information. Additionally, criminals may send emails to the HR or accounting department pretending to be a top executive. They will ask for employee W-2 information and use the information to file false tax returns with your employees’ information.

How to Protect Your Business

It’s important to keep both your business and your employees protected from identity theft and tax scams. Here are some ways to do it:

Fake Charities

Small businesses often look to make charitable donations at year-end to lessen the amount of income tax they owe. Unfortunately, scammers take advantage of this fact and form fake organizations pretending to be real charities.

To protect your business, always take the time to check the status of a charitable organization before making a donation. Scam artists often choose names that are similar to real charities, so even if it sounds familiar, do your due diligence first.

Additional Resources:

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