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Preventing Your Business from Falling Prey to Tax Fraud

Two men inspecting a chart on a computer monitor to illustrate tax identity theft
September 30, 2016

The dangers of tax filing fraud to businesses

Tax filing fraud (or tax-related identity theft) occurs when someone uses your Employer Identification Number (EIN) to fraudulently declare earnings and withhold taxes on a counterfeit W2 form in order to file a tax return that claims a refund. Businesses are often unaware that this has happened to them until the IRS discovers a discrepancy between the total the business paid in payroll taxes and what has been claimed by the fraudsters. As a result, the IRS may send a letter to the business saying they owe withholding taxes.

What You
Should Know

Your business can be a victim of tax filing fraud if someone uses your EIN to file a tax refund claim.

What You
Can Do

Report any suspicious tax-related emails to the IRS.

45% of all FTC complaints in 2015 were related to tax fraud.1

Know the warning signs of tax fraud

Unfortunately, it’s easy for criminals to obtain a business’s EIN. So you may not become aware that you’re a victim of tax fraud until you are contacted by the IRS or state agency about any of the following:

  • More tax returns were filed using your EIN than the number of your employees
  • IRS records a deficiency in the withholding amount and/or employment taxes your business has paid, and demands immediate payment
  • The IRS tax examiners call to verify suspicious claims or W2 forms
In 2016, there was a 400% increase in phony tax-related emails pretending to be from the IRS.2

What to do if you become a victim of tax fraud

  • Respond immediately to any IRS notice
  • If you previously contacted the IRS and did not have a resolution, contact them for specialized assistance at 1-800-908-4490
For tax year 2011, more than 270,000 fraudulent tax returns claiming refunds used stolen EINs.3

To report possible tax fraud

Report suspicious online or emailed phishing scams to or by phone at 1-800-366-4484.

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