September 22, 2016
A great deal of attention is paid to individual tax identity theft — when a taxpayer’s personal information (including Social Security number) is used to fraudulently obtain a refund or commit other crimes. But businesses can also be victims of tax identity theft.
Business tax identity theft occurs when a criminal uses the identifying information of a business, without permission, to obtain tax benefits or to enable individual identity theft schemes. For example, a thief could use an Employer Identification Number (EIN) and file a fraudulent business tax return to claim a refund or refundable tax credits. Or a fraudster may report income and withholding for fake employees on false W-2 forms. Then, he or she can file fraudulent individual tax returns for the “employees” to claim refunds.
In many cases, businesses don’t even know their information has been stolen until they’re contacted by the IRS. The consequences can include significant dollar amounts, lost time sorting out the mess and damage to your reputation.
Signs your business could be a victim
There are some red flags that indicate possible tax identity theft. For example, your business’s identity may have been compromised if you receive:
A notice from the IRS about fictitious employees.
An IRS letter stating that more than one tax return has been filed in your business name.
A notice from the IRS that you have a balance due when you haven’t yet filed a return.
Steps to take
If you receive a letter or notice from the IRS that leads you to believe someone fraudulently has used your business EIN, respond immediately to the contact information provided. Contact us for more information about how to proceed.
There had been some concern that tax reform would include the elimination of tax-deferred like-kind exchanges. The good news is that the TCJA still generally allows them for real estate. But there are limits you need to be aware of.
Should you become incapacitated, a financial power of attorney authorizes your representative to manage your financial affairs. But without proper safeguards in place, it’s at risk for abuse.
If your business made building or equipment repairs last year, the cost might be fully deductible on your 2017 tax return. But it might not be…