Tax season is approaching and with the influx of W-2 forms and tax return filings comes new and more ingenious phishing scams. Prevent yourself and your employees from falling victim to these W-2 scams with these simple steps.
In December last year, the IRS issued a news release warning employers to be on guard against the growing risk of W-2 scams. Since tax records contain highly sensitive data, these forms are a big target for scammers. Small business identity theft offers big rewards to scammers and can be detrimental for victims. Identity thieves use the stolen personal information to open credit cards, open new lines of credit, and file fake W-2s. Now, scammers are using company names and Employer Identification Numbers (EINs) to file fraudulent returns.
As stated in the news release, “the IRS has identified an increase in the number of fraudulent Forms 1120, 1120S and 1041 as well as Schedules K-1. The fraudulent filings apply to partnerships as well as estate and trust forms.”
The IRS has issued this list of issues as red flags of potential identity theft:
- Extension to file requests are rejected because a return with the Employer Identification Number or Social Security number is already on file;
- An e-filed return is rejected because a duplicate EIN/SSN is already on file with the IRS;
- An unexpected receipt of a tax transcript or IRS notice that doesn’t correspond to anything submitted by the filer.
- Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.
How to Protect Against W-2 Scams
Identity thieves are becoming smarter, making it much easier for unsuspecting victims to willingly give over sensitive data. The IRS warns of emails that appear to be from executive or organization leader contacts to a payroll or HR employee. These emails appear to be legit, so employees feel comfortable giving over their personal information. It can take weeks for them to realize their mistake, giving thieves ample time to use the data.
Put steps in place for sharing sensitive information, such as requiring a verbal confirmation before sending it in an email or requiring two people to review distribution prior to sending. The biggest deterrent is to be aware of the risk so keep your employees informed of this fraud trend. For further resources, the IRS has provided these links:
Safety with Charleston Payroll
At Charleston Payroll, we uphold the highest standards of security and data theft prevention. We take extra steps to prevent your sensitive information from being stolen or misused. Every team member stays informed on the latest payroll and timekeeping practices, as well as employment compliance and laws. This has helped set Charleston Payroll apart from other agencies in the area. However, we also highly value your trust in our team and take extra steps to ensure your information is safe. Trust Charleston Payroll to save you time and money, throughout tax season and more.