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IRS Warns About Small Businesses Tax Scams

The 2018 tax season is on the horizon, and typically this time of year is when the IRS begins warning taxpayers about scams to watch for. However, while the so-called “Dirty Dozen” typically is focused on individual preparers, the IRS is separately warning about a few small business tax scams, including one targeting employees.

The Equifax hack of 2017 highlighted the importance of cybersecurity for businesses large and small to ward off complicated threats. However, the past year has seen a spike in a simple phishing attack in which scammers attempt to gain access to companies’ W-2 forms, which most notably include workers’ Social Security numbers, among other information.

A quick breakdown of how the operation works: A would-be scammer will email someone with access to employees’ W-2 forms – typically someone in payroll or human resources. The person often will pose as the CEO or another corporate executive, and include a reference to a “review” or “request” in the email subject line. At some point in the exchange, the person will ask for a bundle of employee names and corresponding W-2s. Anyone who complies ends up providing sensitive personal information to the fraudster.

What should you do in the event of such attack? The IRS has put together a specific protocol for the W-2 attack, but in short, an affected business should email dataloss@irs.gov with their contact information to notify the agency, explain the extent of the information provided, report the incident to law enforcement and explain what happened to any potentially affected employees.

A few other warnings that small business owners should heed this tax season:

  • Info scam: Businesses and individuals alike are being targeted by scammers posing as the IRS, typically either informing a reader about a refund or requesting additional information. Links in these emails, if clicked, will grant access to the victim’s computer.
  • Business credits: Some of the IRS’ warnings are actually aimed at business owners in an effort to make sure they toe the line. For instance, the IRS has told businesses not to try to pad their returns by claiming tax credits they don’t qualify for. Failing to do so could result in an audit, fines and even jail time.
  • Overzealous tax preparers: Another thing that businesses and individuals alike should watch out for are aggressive tax preparers promising big returns. Per IRS Commissioner John Koskinen, “If it sounds too good to be true, it probably is.”

Worried about small business tax scams? The experts at McManamon & Co. provide a full suite of tax services that keep your information safe – and we can also help reduce your tax burden without playing fast and loose with the IRS.

Learn more about what we can do for you this tax season. Call us at 440.892.9088 or contact us online.

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