WASHINGTON – The IRS, state tax agencies and the nation’s tax industry joined together to warn small businesses to be on-guard against a growing wave of identity theft against employers.
Small business identity theft is a big business for identity thieves. Just like individuals, businesses may have their identities stolen and their sensitive information used to open credit card accounts or used to file fraudulent tax refunds for bogus refunds.
The Internal Revenue Service, state tax agencies and the private-sector tax community — partners in the Security Summit — are marking “National Tax Security Awareness Week” with a series of reminders to taxpayers and tax professionals. The week concludes with warnings about small business identity theft.
In the past year, the Internal Revenue Service has noted a sharp increase in the number of fraudulent Forms 1120, 1120S and 1041 as well as Schedule K-1. The fraudulent filings apply to partnerships as well as estate and trust forms.
Identity thieves are displaying a sophisticated knowledge of the tax code and industry filing practices as they attempt to obtain valuable data to help file fraudulent returns. Security Summit partners have expanded efforts to better protect business filers and to better identify suspected identity theft returns.
Identity thieves have long made use of stolen Employer Identification Numbers (EINs) to create fake Forms W-2 that they would file with fraudulent individual tax returns. Fraudsters also used EINs to open new lines of credit or obtain credit cards. Now, they are using company names and EINs to file fraudulent returns.
As with fraudulent individual returns, there are certain signs that may indicate identity theft. Business, partnerships and estate and trust filers should be alert to potential identity theft and contact the IRS if they experience any of these issues:
New Procedures to Protect Business in 2018
The IRS, state tax agency and software providers also share certain data points from returns, including business returns, that help identify a suspicious filing. The IRS and states also are asking that business and tax practitioners provide additional information that will help verify the legitimacy of the tax return.
For 2018, these “know your customer” procedures are being put in place that include the following questions:
Sole proprietorships that file Schedule C and partnerships filing Schedule K-1 with Form 1040 also will be asked to provide additional information items, such as a driver’s license number. Providing this information will help the IRS and states identify suspicious business-related returns.
For small businesses looking for a place to start on security, the National Institute of Standards and Technology (NIST) produced Small Business Information Security: The Fundamentals. NIST is the branch of the U.S. Commerce Department that sets information security frameworks followed by federal agencies.
The United States Computer Emergency Readiness Team (US-CERT) has Resources for Small and Midsize Businesses. Many secretaries of state also provide resources on business-related identity theft as well.
The IRS, state tax agencies and the tax industry are working together to fight against tax-related identity theft and to protect business and individual taxpayers. Everyone can help. Take steps recommended by cyber experts and visit the Identity Protection: Prevention, Detection and Victim Assistance for information about business-related identity theft.
Online Seminars from the 2016 IRS Nationwide Tax Forums are Now Available WASHINGTON — The Internal Revenue Service today reminded tax professionals that they can earn continuing education credits online through seminars filmed at the 2016 IRS Nationwide Tax Forums. The forums are three-day events that provide tax professionals with the most up-to-date information on federal and state tax issues; in 2016, they were held in five cities across the nation. More than a dozen self-study seminars are now available on the IRS Nationwide Tax Forums Online (NTFO). Self-study seminars provide information to participants through interactive videos, PowerPoint slides and transcripts. The 2016 online forum seminars cover many topics of interest to tax professionals including: Is Your Case Ready for Appeals? (Examination Edition) Foreign Tax Credit for Individuals Emerging Issues in Tax Practice Due Diligence ACA Employer and Coverage Provider Information Reporting Requirements The online seminars are registered with the IRS Return Preparer Office and the National Association of State Boards of Accountancy (NASBA) as a qualified sponsor of continuing education. For a fee, CPAs, Enrolled Agents and Annual Filing Season Program participants taking NTFO seminars can earn continuing education credits. To earn credit, users must create an account, answer review questions throughout the seminar and pass short tests at the end of the seminars. The seminars can also be audited for free. Individuals who choose to audit seminars will not have access to the review questions or final examination and will not receive credit for the seminar. In addition to the recently added seminars, NTFO also offers many seminars from prior-year IRS Nationwide Tax Forums. For more information, please visit www.irstaxforumsonline.com.
WASHINGTON — The Internal Revenue Service today reminded tax professionals that they can earn continuing education credits online through seminars filmed at the 2016 IRS Nationwide Tax Forums. The forums are three-day events that provide tax professionals with the most up-to-date information on federal and state tax issues; in 2016, they were held in five […]