Identity Theft continues to be a growing issue for the IRS, tax payers, and tax preparers. One scheme affects businesses and their employees, and it involves W-2 forms that are used to report employee wages and withholding. The way that the scam works is that the fraudster pretends to be a CEO or other senior executive and sends an email to Human Resources or Payroll departments asking for copies of W-2s. Alternatively, the email pretends to be from HR or Payroll asks individuals for information “necessary to prepare W-2s.”
In either case, if the email recipient responds, then he or she has provided the swindler with personal identifying information or PII as well as important financial information. The fraudster can then use the information to create fake accounts. This time of year, a common scam is creation and filing of fraudulent tax returns.
The key to this fraud is that the perpetrator can create an email that pretends to come from someone official. Recipients want to be helpful, and reading what they think is an authentic email, they provide the information. The best way to guard against this is with healthy skepticism. When in doubt, contact the sender directly but do not reply to the email. If the email address is spoofed, then you will send the response to the scammer if you simply hit reply. In addition, ask yourself if this is a normal procedure. Why would an employer need to ask existing employees for information necessary to create W-2s? Why would a senior executive ask for a copy of W-2 forms unexpectedly?
Be security conscious and do not become a victim of fraud this year.
Fraud affects your relationship with the IRS and your tax preparer too. Your tax preparer will probably ask you for additional identification this year. In addition, if you have ever been the victim of tax-related identity theft, the IRS will have provided you with a code that will have to be entered on your tax forms.
The IRS will always notify a taxpayer before transferring their account to a private collection agency (PCA). First, the IRS will send a letter to the taxpayer and their tax representative informing them that their account is being assigned to a PCA and giving the name and contact information for the PCA. This mailing will include a copy of Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency.
If you owe the IRS and you have not been responsive to collection efforts, you may want to be on the lookout for this correspondence from the IRS. Even if you don’t owe the IRS, you should be alert. Remember that a common scam is when someone impersonates the IRS or other official. This adds a new potential wrinkle. Scammers can now claim to be private collectors representing the IRS. In the past, this would have been an obvious red flag.
As always, if you have any doubts about tax-related correspondence, you should contact a professional. If you receive an unsolicited call or mail, do not give out personal information. Do not agree to anything, and do not provide banking or financial information. If you receive a suspicious letter, be sure to check it out using known addresses and telephone numbers before you respond.