Tax identity theft is a growing risk for American businesses. This form of identity theft happens when thieves steal a business’ Employer Identification Number (EIN) and other tax information so they can submit a fraudulent tax return and claim tax benefits on behalf of their victim. Thieves may also use a business’ EIN to file W-2s for fictitious employees, then claim fraudulent tax refunds for each “employee.” As a business owner, it’s important to understand how this crime can affect you and what to do if it happens to your business.
Tax identity theft can be a major headache for businesses. Repairing the damage of tax identity theft is a time-consuming process that involves a thorough IRS investigation. In addition to interfering with your productivity, tax identity theft can also cause significant financial losses or damage to your business’s reputation.
Unfortunately, it’s difficult for businesses to spot this type of identity theft before the damage has been done. But quickly recognizing the signs of potential tax identity theft can help you address this problem right away. If tax identity theft has occurred, you may receive IRS notices saying one or more of these things:
It’s possible that these notices may result from processing or filing errors, not theft, but it’s always best to check. Contact the IRS right away if you receive one of these notices.
If you believe your business is the victim of tax identity theft, you should take the following steps right away:
As with other forms of identity theft, fraudulent activity may not be confined to a single incident. Follow these tips to monitor and protect your business’s financial identity:
Identity Theft Resources
If you suspect that your business has been the victim of account fraud or identity theft, it’s important to respond right away. Visit our Identity Theft page to learn more and access important resources for businesses affected by identity theft.