Business Owners Warned About Identity Thieves

The IRS, state tax agencies and the tax industry urged employers of all sizes to step up their cybersecurity protections against business identity theft. Identity thieves have displayed a sophisticated knowledge of the tax code and industry filing practices as they attempted to obtain valuable data to help file fraudulent returns. In order to address this situation and protect taxpayers and their business returns, the IRS has decided to take steps to identify and prevent business identity theft.

As with fraudulent individual returns, there are certain signs that indicate identity theft has occurred to a business. Business, partnerships and estate and trust filers should be alert to potential identity theft and contact the IRS if they experience any of these issues:

• Extension to file requests are rejected because a tax return with the Employer Identification Number (EIN) or Social Security number (SSN) is already on file.
• An e-filed return is rejected because of a duplicate EIN or SSN is already on file with the IRS.
• Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.
• Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.

The IRS has also requested tax professionals who prepare business-related returns to step up the "trusted customer" procedures. Tax preparation software for business-related returns should ask the following questions to help protect the business filer:

• The name and SSN of the company executive authorized to sign the corporate tax return, including Form 1065 and is this person authorized to sign the return?
• Payment history – Were estimated tax payments made?
• Total income amount from prior-year filings.
• Parent company information – Is there a parent company? If yes, the name?
• Additional information based on deductions claimed.
• Filing history.