Every American business has its own Social Security number, also known as a Federal tax ID, Employer Identification Number (EIN) that identity thieves can target. In July 2017, the IRS warned that tax refund identity theft scams targeting US businesses were becoming more widespread.
Corporate Identity or Business Identity Theft
2015 witnessed an embarrassing breach in which cyber-thieves stole $39 million in federal refunds based on personal identification data hacked from over 700.000 taxpayer accounts on an IRS website. This year, 107.000 individual victims have been registered through May, which is down from 204.000 in May 2016 and 297.000 in May 2015.
To enjoy exceptional business funding opportunities and the highest level of security for payment processing, turn to First American Merchant. Firstamericanmerchant.com (FAM) is a reputable alternative online lender and processor that offers ACH check services and more to merchants of any type and size.
Your Business May Be Targeted Because:
- It has generous credit terms and isn’t monitored closely by the bank since banks expect companies to make large-ticket purchases
- It has several credit cards on a single account and doesn’t look over the itemized list of charges before paying the bill
- Thieves can easily collect information about it
- An identity thief pretending as a business can easily get a line of credit with another company. Sometimes, just a request on your company’s letterhead, which includes the business license number and tax ID, can be enough.
To Commit a Business Tax ID Theft, an ID Thief Obtains Key Information About a Business and Then:
- Uses an EIN to file fake fuel tax credits
- Uses an EIN to file fake corporate returns to obtain tax refunds
- Finds Schedule K-1s of S corporations to file fake tax returns under shareholder names
Signs of Business ID Thief:
- Your filing extension request is rejected because a return with your EIN has already been filed
- Your e-filed return is rejected because a duplicate EIN is already on file with the IRS
- You suddenly receive a tax transcript or IRS notice that has nothing to do with what you submitted
- You fail to receive expected and routine correspondence from the IRS because your address has been changed by the thief
Security Actions by the IRS
The IRS’s Security Summit has already increased measures to protect C corporations filing Form 1120. The IRS and other members of the partnership have urged tax preparers to work on increasing security measures so to prevent ID theft.
For the 2018 tax filing system, the IRS is going to ask tax professionals to collect more information about their business clients such as the name and Social Security number of the company officer authorized to sign the business tax return, tax payment history for the firm, information about parent companies, and recent tax filing history.
Security Actions by Businesses
To protect your company data from ID thief, focus on:
- Increasing computer security
- Limiting access to company data
- Encrypting data
- Using the cloud
According to Federal investigators, about 10.000 business-related tax returns potentially involving refund fraud were registered through June 1 of this tax filing year. The total represents a jump from nearly 4.000 during all of 2016 and 350 for 2015. The IRS reports $137 million so far for 2017, $268 million in 2016, and $122 million in 2015. Take the right measures to provide the best protection for your business.