While you can’t always control others targeting you with tax scams, you can take several steps to protect your business. We outline five common tax scams below and what you can do if you find yourself in that situation.

 

Fraudulent Emails

Also known as phishing, these types of fraudulent emails are common across many industries. You may receive an email that looks like it legitimately came from the Internal Revenue Service (IRS), your bank, accountant, or tax preparer. The emails will direct you to provide sensitive data after clicking a link to a fake website. They could also contain attachments that could harm your computer if you open them.

The IRS never contacts anyone by email, so you can rule that one out as a phishing scam right away. As for the other types of businesses, we recommend calling them to confirm the email is legitimate. If you look closely, you can often spot sure signs of fraudulent emails such as misspellings or a blurry logo.

 

Fake Tax Scams for Charity

Scammers intent on committing fraud will go so far as to set up a fake charity website with an address very close to that of a legitimate charity. If you donate to the illegitimate charity, you will eventually find out because you won’t be able to claim it as a tax deduction.

Besides evaluating website addresses carefully, you can use a tool on the IRS website to check if your donation will be tax-deductible in advance. To do this, you will need the employer identification number (EIN) of the group receiving the donation. A legitimate organization shouldn’t have a problem giving this to you.

 

Tax Scams by Telephone

In this version of a tax scam, a person calls your business claiming to be a representative of the IRS. He or she states that you owe money and that you must pay it via wire transfer, store gift cards, or another unusual method immediately. The scammer will claim that the IRS will shut down your business, arrest you, or suspend your driver’s license as an intimidation tactic. Those who perpetuate this scam often prefer to target immigrant business owners and threaten deportation if they don’t comply with demands.

Fortunately, this is one of the older tax scams and easier to see through than some of the others. The IRS never calls people on the phone, threatens jail time, requests personal financial data, or insists on immediate compliance without giving taxpayers the opportunity to appeal or receive a detailed explanation of the amount due.

 

Tax Scams Using W2 Data

In this sophisticated form of fraud, scammers create an email that appears to come from within the company. Typically sent to human resources, accounting, or payroll. These emails request the recipient to forward copies of employee W2 forms. After receiving them, scammers sell social security numbers and other information for use in identity theft. The best way for your company to protect itself is to allow only certain people to respond to W2 requests and to follow an established protocol to ensure the request is legitimate.

 

Fraudulent Tax Preparation

A tax preparer without adequate credentials can steal the information you provided to commit identity theft or obtain a refund for themselves in your name. Be sure to check the credentials of any tax preparer before becoming a client. You can inquire through the IRS or check the State Board of Accountancy for current credentials. If the tax preparer seems dishonest by encouraging you to take deductions you know you’re not entitled to or associating the fee with the amount of your refund, stop working with him or her right away and report your concerns.

If you have other tax questions or concerns, don’t hesitate to contact Rickhoff & Associates.