IRS Offers Business Tax Tips to Deter Identity Theft

tax related identity theftThe Internal Revenue Service continues to drive home the message about the danger of tax-related identity theft.


The Security Summit is a coalition of state and federal tax officials, along with private sector representatives, that works to combat cyber tax fraud, digital criminal syndicates, and organized gangs that file fraudulent tax returns in order to skim tax refunds. Organized in 2015, the coalition has six working groups that tackle different mandates such as strategic threat assessment, taxpayer awareness, and identification of tax refund fraud. 


The group currently involves 42 entities with 20 industry representatives along with staff from the IRS. Over the span of the first two years of the Security Summit, the group reports a 57 percent reduction in identity theft returns and a 65 percent decline in the number of taxpayers reporting as tax return theft victims. 


As we reported last summer, in 2021 the Security Summit stressed the importance of the IP PIN program. This year, the Summit produced guidance for tax professionals to help detect and avoid tax identity or tax data theft. 


Red flags that could be signs of a hack or tax refund theft include:

  • Slower than usual computer speed, including slowed system processes
  • Activity that occurs on the screen without a prompt
  • Being locked out of a computer
  • Rejection of client e-filed tax returns because the Social Security number was reported on another return
  • Acknowledgment of receipt by the IRS of e-filed returns that were not sent by the professional and clients responding to an email that the tax preparer did not send


Signals from clients that they could be experiencing tax identity theft:

  • Receipt of notices from the IRS by a client that reports the IRS has locked their account, or that has been accessed by someone else
  • Notices from the IRS referencing incorrect data from a return, especially if the client has not yet filed
  • Receipt of tax transcripts that the client did not order
  • Receipt of refunds for tax returns or IRS Authentication letters for tax returns that have not yet been filed


Criminal tax fraud is easier to perpetrate online than it is in person. Bad actors can easily target a corporation or an individual taxpayer to obtain passwords, personal contact, and other information that allows for personal identity theft, or database access from which thousands of names and information can be harvested to create fraudulent returns.


If you believe you have suffered tax identity theft, speak with your tax professional to quickly assess the vulnerability of your tax return, refund, or financial accounts. 


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From offices in Chicago and Cleveland, Robert J. Fedor, Esq., LLC offers strategic legal guidance to clients throughout the U.S. and abroad on IRS audits, criminal tax investigations, payroll tax issues, and more. When you have questions about individual or business tax compliance, call us at 800-579-0997 or contact us.


Understanding Tax Fraud