When a business’ Employer Identification Number (EIN) or its employees’ and/or customers’ social security numbers are stolen, it can wreak havoc on your business. Most companies think about safeguarding social security numbers and have systems in place for doing just that. However, it’s equally important to do the same for the EINs so that you’re not inadvertently opening the door to business tax identity theft that can be difficult to fix. Such as, reversing a fraudster’s false income and withholding reporting or the claims they’ve made against your business that pave the way for them to receive a tax refund. You may not even realize your business has been the victim of fraud until you attempt to file your tax returns, only to find the IRS already has you marked down as having filed.
To help minimize business tax identity theft risk, the IRS has a new act on the books (namely, the Protecting Americans from Tax Hikes Act) which requires employers to file W-2, W-3, and 1099 forms by January 31st of the year following the tax year.
While the IRS can put safeguards into place that can help you avoid falling prey to a fraudster, you need to take action, too, to make sure all of your bases are covered. Reduce your business’s risk by putting these nine tips into action:
- Using antivirus and other security software on all workplace computers;
- Updating your data security plans regularly to reflect new risks;
- Truncating or redacting the numbers where possible;
- Keeping the numbers and other sensitive information in a secure location and restricting access;
- Updating business filings with the IRS and the Secretary of State for your state when contact information changes;
- Monitoring your credit reports, IRS, and state tax authority accounts, and other business filings;
- Filing tax returns and W-2s, W-3s, and 1099s as early as possible;
- Educating employees and customers about phishing schemes by reminding them that the IRS doesn’t initiate contact with taxpayers by e-mail, text messages, or social media to request personal or financial information; and
- Developing an action strategy for dealing with tax identity theft, including identifying who to notify in the event of theft.
Stay ahead of the curve by implementing these strategies now. If you have questions about how to protect yourself or how to implement your strategies, contact us.