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Tax Law

Hard at Work this Week: Tax Professionals and Tax Scam Artists

fraudToday begins the final week of last minute tax preparation prior to next Monday’s filing date of April 18, 2016.

This busiest of tax seasons is also the time when the bad guys, tax scam artists, are also working overtime. What are these tax scammers trying to accomplish?

  • Tricking a taxpayer into mistakenly paying a third party, thinking they have paid the Internal Revenue Service.
  • Trying to obtain personal identification information such as names and social security numbers as a way to pull off identity theft.

The IRS has discovered a pattern of cyber-criminals trying to obtain personal identification information in a novel way: by targeting corporate payroll officers and human relations departments.

The form that these cyber criminals are targeting: the W-2 form, which contains the taxpayer’s name, address and social security number, the three elements needed to steal a person’s identity and even try to file a false claim for a tax refund.

The IRS issued a press release on March 1, 2016, warning small and large businesses to be wary of anybody who asks for W-2’s. Some of the most egregious examples of fraud involve a person using official-looking corporate emails, posing as a financial supervisor, asking for electronic images of the W-2’s.

If you receive one of these “phishing” letters, do not respond to the email or letter. Instead, show the content of the communication to your CFO or comptroller, using your in-house email system or better yet a phone call. If this is a fraudulent request, you can report it immediately via the IRS tax fraud reporting sector of their website.

Even if you have unwittingly given out employee tax identification information, all is not lost. But you must act quickly and contact the Criminal Investigation Division of the IRS. The CID will then mark the files of all taxpayers whose privacy has been compromised which will alert the IRS internal system if more than one tax return is filed, a sign of fraud and identity theft. Of course, employees must immediately be told if there is a security breach of this nature, so that they can monitor all of their finances and inform financial institutions, tax preparers and credit reporting agencies. In addition, taxpayers need to file IRS Form 14039, which is known as the Identity Theft Affidavit.

You can read the entire IRS press release on this latest scam here:

https://www.irs.gov/uac/Newsroom/IRS-Alerts-Payroll-and-HR-Professionals-to-Phishing-Scheme-Involving-W2s