In this year alone, the IRS has been dealing with hundreds of thousands of cases of identity theft perpetrated through tax returns. Typically, a criminal will obtain an individual’s Social Security Number and maybe other sensitive identifiers, which they’ll use to file a false tax return claiming various refunds from the government. Victims of identity theft often don’t know that a false return has been filed using their SSN, and in some cases their children’s SSNs, as the criminals list them as dependants.
One of the key ways that criminals get their hands on SSNs and other sensitive information is through businesses. As a business owner, you have not only your own identifying information on file, you also have the sensitive information for all your employees. Criminals may also obtain your business ID number, filing a false return under your company’s name.
Unfortunately, there isn’t a 100% foolproof way to protect you and your employees against tax identity theft. There are, however, some safeguards you can put in place and some vigilant behaviors you can adopt, including the following:
- Do what you can to keep your computers or servers from getting stolen; even something as simple as forgetting to lock a window could mean that your valuable equipment, with all the sensitive information on it, is now in criminal hands. Also, educate your employees about the secure use of equipment, so that if they need to take a business laptop home that contains sensitive information, they’ll be less likely to do something foolish such as leave it in their car unattended.
- If you’re planning to get rid of a certain machine, make sure you don’t just drop it off in the dumpster behind your building; you’ll need to completely wipe out the contents of the hard drive and also thoroughly destroy the machine (by shredding it, for instance).
- Use the best data security measures at your disposal. These include firewalls, anti-malware programs, secure networks (including for Wi-Fi), complicated passwords that only certain authorized people have access to, and secure software.
- Beware of scams, as you may get emails, phone calls, or even in-person visits from people claiming to be representatives of the IRS who supposedly need your sensitive information to look into a problem with prior tax returns or conduct an audit. Always doublecheck with the IRS itself that they’re attempting to contact you, and confirm that any messages you receive are official notifications, which likely won’t be transmitted by email or phone.
- Remain vigilant about strange activities surrounding your tax returns. If you’re a victim of identity theft, you or your employees might receive official notifications from the IRS claiming that they’ve received duplicate tax returns from you; they may also write to you about information that you never included on your returns. As soon as you get wind of any discrepancies, immediately notify the IRS, and look into whether your employees are facing similar issues.
- Use only reputable tax preparers and financial advisors, who’ll value your security and work to help your business thrive.
A key part of preserving the financial health of your business is protecting yourself against identity theft, including false tax returns. Tax identity theft will rob you of precious time and money; it may take months for the IRS to resolve your problems, and even then they may give you trouble along the way, demanding money you don’t owe or withholding refunds that you deserve. For any problems with the IRS, contact us, and we’ll help you figure out how to resolve the issue ASAP.