Small Business: Be Alert to Identity Theft
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 bogus refunds. As such, small business owners should be on guard against a growing wave of identity theft against employers.
In the past year, the Internal Revenue Service has noted a sharp increase in the number of fraudulent Forms 1120, 1120S and 1041 as well as Schedule K-1. These fraudulent filings apply to partnerships as well as estate and trust forms.
Security Summit partners (IRS, state tax agencies, and the private-sector tax community) have expanded efforts to protect business filers better and identify suspected identity theft returns.
Identity thieves display a sophisticated knowledge of the tax code and industry filing practices and have long made use of stolen Employer Identification Numbers (EINs), which they use to create fake Forms W-2. These fake Forms W-2 are then used to file with fraudulent individual tax returns.
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