Your business may be just entering a new fiscal year, but some common threats remain ever present. Tax ID theft is one form of business identity theft that targets businesses of any type. This ongoing threat aims to use the tax identification number the IRS associates with your business to obtain undue tax benefits. Also known as an EIN number, it is similar to a social security number as it’s used to document, report, and file the necessary tax statements and other important documents associated with your business.
This EIN is a valuable piece of identifying information for you to conduct many of your business needs, in addition to its importance in the eyes of the IRS. The ability to open bank accounts, secure funding, and many other essential day-to-day facets of a business require the use of this information. This also makes it very valuable in the eyes of identity thieves looking to gain easy access to a vital form of information to commit fraud. And since EINs are often not seen as data that needs to be guarded as securely as an SSN, business tax ID theft and fraud are ever prevalent.
What You Need to Know About Business Tax ID Theft
Access to a business name and EIN number are all that threat actors need to pursue fraudulent activities. Once equipped with this data, they can make any number of attempts to obtain certain benefits that the stolen information may allow. Fake tax returns can put money into the thieves’ pockets rather than the real business’s bank accounts. Attempts to collect refundable business credits are another avenue a criminal can pursue here.
Stolen EIN information can also be used to gain access to other personal identifying information from employees or owners of the business as well. This means that multiple levels of identity theft can be opened up as a result, with the threat lingering in the shadows with or without the knowledge of the business or any individual within who has had their personal information compromised.
Warning Signs that Your Business’s EIN Information May Be Compromised
There is a very good chance that you may not know right away that your business’s EIN information has been stolen. Identity thieves bank on that possibility and will attempt to take quick action to file false claims in order to profit before the breach is realized. Making everyone involved in your business aware of this possibility, employees and otherwise, is a first line of defensive action against it, but being aware of the other warning signs is also vital to being able to restore things quickly and effectively.
If you file your taxes for the first time of the calendar year and they end up being accepted as an amended return, someone has already used the EIN associated with your business. This is a direct sign of business identity theft in progress. IRS notices to your accounting department regarding employees who don’t actually exist are another sure sign of attempted fraudulent activity.
These warnings signs don’t always appear in the shape of an IRS notice, however. Also be on the lookout for:
- A data breach at a different company with whom your company has conducted business
- Receipt of bills of unknown origin
- Receipt of business lines of credit that have not been applied for
- Unauthorized charges or withdrawals on business accounts
Always important to remember as well is that there won’t always be a warning sign when your business’s identity has been stolen. You should always keep a watchful eye on all business accounts and actively look into all recent banking and lending activities as part of your day-to-day operations.
What to Do If Your Business Experiences Tax ID Theft
It is always recommended that a business have an identity theft restoration plan in place before any type of threat presents itself. This will enable businesses of every size to identify data security breaches, business identity theft, and other cyber threats quickly in order to restore things and limit the scope of the event. Instances of tax ID theft and many other types of data breach are becoming part of everyday existence in the modern business world.
Quick action is essential but there are some other steps to take if your business becomes a victim to this type of fraud.
A Business Identity Theft Affidavit (IRS Form 14039-B) is available to alert the IRS immediately if you suspect that your EIN number has been compromised. If you encounter any of the warning signs above or have any other indications of potential business identity theft, this Form will put it on the IRS radar, speeding up the process of investigation and limiting fraudulent attempts at filing and the like.
Keeping track of where and how an EIN is used is another key tactic to help prevent business tax ID theft and the ramifications of this type of fraud. Treat all documents that contain this information as highly sensitive, and limit who has access to the data as much as possible. Educating employees or other owners about the importance of safeguarding EIN information can also be critical as this will reinforce the very real possibility of a threat and the impact it can have on not only the business, but to those involved as well.
As these types of threats increase, it’s also good to know that the IRS is doing what it can to keep up. The government agency recently began concealing information on certain documents that could give thieves access to EIN information. This pertains to documents such as summary of corporate returns and business tax transcripts that once provided relatively easy access for identifying information. While it’s vital to do all that you can to keep your business’s data security in line, it’s also good peace of mind to know that organizations in the federal and private sectors are working toward your best interest as well.
LibertyID is the leader in identity theft restoration, having restored the identities of tens of thousands of individuals without fail. If you retain personal information on your customers, now is the time to get data breach planning and a response program in place with our LibertyID for Small Business data breach preparation program. With LibertyID Enterprise you can now add value to existing products, services, or relationships by covering your customers, employees, or members with LibertyID’s fully managed identity theft restoration service – at a fraction of our retail price – with no enrollment and no file sharing. We have no direct communication with your group members – until they need us.
Call us now for a now obligation proposal at 844-44-LIBERTY (844) 445-4237