Don’t Take the Bait – Business Identity Theft

The third topic of the 10-week IRS series “Don’t Take the Bait”, which focuses on security updates for tax professionals, is that of business identity theft. The July 25th article offers advice on how tax professionals can protect their clients—and their own businesses—from business-related identity theft.

To start, the post offers a brief overview of recent cybercrime statistics, comparing and contrasting trends in individual identity theft versus business identity theft:

  • For the first five months of 2017, reports of individual identity theft have declined sharply—down 47% compared to the same period in 2016.
  • The IRS reports an increase in identity theft involving business-related tax returns—approximately 10,000 reports already in just the first half of 2017, compared to 4,000 for calendar year 2016 and 350 for calendar year 2015.
  • The first five months of 2017 saw 177 reported data breaches at tax preparers’ offices.
  • The IRS receives approximately three to five reports of data breaches each week.

So what steps is the IRS taking in order to battle this increase in business-related tax identity frauds? They are employing a number of strategies, inclduing:

  • Gathering data elements from the tax software industry in order to better help identify suspected identity theft business returns.
  • Asking tax professionals to gather more information on their business clients in order to assist the IRS in authenticating that tax returns being submitted are not fraudulent.
  • Warning tax professionals to beware of any potential business clients claiming they do not currently have an Employer Identification Number (EIN).

For more details, read the article in full at