If you own a small business, be vigilant against a growing wave of identity theft against employers. Small business identity theft is a big business for identity thieves. Just like individuals, businesses may have their identities stolen and their sensitive information used to open credit card accounts or used to file fraudulent tax refunds for fake refunds.
In the past year, the IRS has noted a sharp increase in the number of fraudulent Forms 1120, 1120S, and 1041 as well as Schedule K-1. The fraudulent filings apply to partnerships as well as estate and trust forms.
Identity thieves are displaying a sophisticated knowledge of the tax code and industry filing practices as they attempt to obtain valuable data to help file fraudulent returns.
Identity thieves have long made use of stolen Employer Identification Numbers (EINs) to create fake Forms W-2 that they would file with fraudulent individual tax returns. Fraudsters also used EINs to open new lines of credit or obtain credit cards. Now, they are using company names and EINs to file fraudulent returns.
As with fraudulent individual returns, there are certain signs that may indicate identity theft.
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: