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IRS warns businesses about identity theft

December 7, 2017

 

Small business identity theft is a big business. Just like individuals, businesses can be victims too. Thieves use a business’s information to file fake tax returns or get credit cards.

 

Identity thieves are more sophisticated than they used to be. They know the tax code and filing practices and how to get valuable data. The IRS has seen a sharp increase in fraudulent business tax forms. These include Forms 1120, 1120S and 1041, as well as Schedule K-1. These affect business, partnership, estate and trust filers.

 

Business owners should be alert for signs of identity theft and contact the IRS if they think their identity has been misappropriated.

 

If the IRS rejects an e-filed return or extension request saying it already has one with the business’s identification number, the owners should contact the IRS to make sure fraudulent documents have not been submitted. Unsolicited notices received from the IRS could also be a sign of identity theft. For example, if the tax filer receives an unexpected tax transcript or a notice from the IRS, this could be a sign that someone has been stealing the business owner’s identity and fraudulently contacting the IRS. However, if the tax filer doesn’t receive expected or routine mailings from the IRS, that could be a sign of identity theft as well.

 

The IRS, state tax agencies and software providers have ways to detect suspicious returns. However, some new measures can help validate returns in advance. The IRS and states are asking businesses and tax professionals to help verify if a tax return is legitimate. These are new programs being implanted in 2018. Software for business tax returns will ask questions related to the person authorized to sign the return, payment history, parent company information, past deductions, and filing history.

 

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