Tax Return Identity Theft: Big Concern for Small Business

Most people who own a small business are well aware that they have to be careful about identity theft and other threats to their security. This has never been more true than it is right now. In fact, the IRS recently issued a warning to small businesses that fraudsters are working overtime to try and get sensitive information from small businesses and then use that information to open credit cards and file fraudulent tax returns.   

While criminals are likely to file all kinds of tax forms with the fraudulent information they obtain, the most commonly filed fraudulent forms include:

l  Form 1120

l  Form 1120S

l  Form 1041

l  Schedule K-1

Typically, what criminals will do is obtain stolen employer identification numbers. From there, they will often use those numbers to fill out falsified W-2 forms and other forms, all in an effort to obtain refunds and open lines of credit.

While small businesses should do everything within their power to protect themselves against identity theft, they should also be aware of the warning signs that identify theft has already occurred. That way, they can report suspicious happenings to the IRS.

Some signs to look out for include:

l  A rejection of an extension to file request due to already having a return on file even though no return has been submitted

l  A rejection of an e-filed return due to a return already being on file, when no return has been filed

l  Receipt of a Letter 5263C or 6042C, a warning of possible identity theft

l  Receipt of tax transcripts that are not in line with submitted returns

l  Not receiving regular correspondence from the IRS due to a falsely changed address or other contact information

Sadly, identity theft is alive and well, but by following these tips and working hard to protect your business, you can keep yourself from becoming a victim.