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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 phishing@irs.gov or by phone at 1-800-366-4484.

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