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5 Strategies to Fight Tax Identity Theft at Your Business
4 min read
Safeguard your business when thieves go after your tax information.
Your business has an identity, and it’s established by a Federal tax ID and an Employer Identification Number. A single slip-up could put this information in the wrong hands, especially during tax season.
Use these 5 strategies to prevent tax identity theft at your business.
Know the Signs and Varieties of Identity Theft
According to the Internal Revenue Service (IRS), “business identity theft happens when someone creates, uses, or attempts to use the identifying information of a business, without authority, to obtain tax benefits.”
These are signs of tax identity theft:
- You receive IRS notifications about employees who don’t exist.
- You get IRS notifications about a closed business, even after you’ve paid outstanding balances.
- You haven’t filed a return for the year, but you have a return that’s accepted as an amended return.
Unfortunately, there are several ways for business information to be compromised without having the IRS or tax returns involved. Here are possible signs of non-tax identity theft:
- You receive bills for utility accounts (water, electricity, trash) you didn’t open.
- You get statements for credit cards or financial accounts you didn’t open.
- You receive communications about properties you haven’t bought.
- Your credit report shows accounts you didn’t open.
- You check your business bank accounts and see transactions that neither you nor anyone at your business made.
- A company notifies you that your business information was compromised in a data breach.
Recognize Phishing Scams
Thieves could physically steal your tax documents, but they’re more likely to digitally target you and your workforce. They might even pose as the IRS.
Put the brakes on these identity theft attempts by:
- Never responding to email requests for personal information that are supposedly from the IRS. The IRS never requests information online.
- Avoiding email links, attachments, and banner ads from suspicious sources that promise to save you money on taxes and get your refund faster.
- Using authentic tax filing sites. Impostor sites are created for the sole purpose of stealing information, so be careful.
Take Security Measures When Sending
Many experts recommend you print your tax documents and physically hand them to your accountant. Your schedule might prevent you from visiting your accountant, but you should take precautions when you send sensitive files online.
When you use a Wi-Fi connection, make sure to:
- Use a trusted network.
- Never log in with your email address or phone number.
- Use the HTTPS protocol and check the full address of any website you type.
- Connect to a VPN.
- Use two-factor authentication.
Ask if your accountant uses secure file exchange software. When you need to send tax documents through email, encrypt the message. It’s also a good idea to encrypt the tax files and protect them with passwords. Never put your personal or business information in the body of an email.
Share These Strategies With Your Employees
Your employees often act as your first and last line of defense against identity theft scams. When your staff knows an ill-advised click could cost the company thousands of dollars, they’ll pay closer attention to their online actions.
With so many job functions being digitized, cybersecurity know-how isn’t just for IT gurus. Several companies offer training that shows employees how to handle phishing emails, USB drives that mysteriously appear, and online requests that don’t feel right.
Know Who to Contact
Even when you take precautions, there’s a chance your tax information could be compromised.
- Close accounts that have been compromised or accounts that you didn’t open.
- File a complaint with the Federal Trade Commission (FTC) online at ftc.gov, or call the FTC Identity Theft hotline at 877-438-4338.
- Contact local police to report the crime.
- Put a fraud alert on your account by contacting Equifax, Experian, or TransUnion.
When you send your tax return, make sure to attach form 14039, Identity Theft Affidavit, which puts your case in the hands of the IRS Identity Theft Assistance department. They will check to see if prior tax years were affected by identity theft, and they’ll flag your account to keep a close watch on tax returns filed with your information.
We’ve discussed tax identity theft strategies, but do you know how well your other assets are covered? Don’t leave your future success to chance. Contact Mayfield Insurance to set up a business insurance plan that fits your unique needs.