IRS PUTS SMALL BUSINESSES ON ALERT

The Internal Revenue Service (IRS) recently issued a News Release (IR 2017-198) to heighten awareness of identity theft toward small businesses.  In the past year, the IRS has noted a sharp increase in the number of fraudulent Forms 1120, 1120S and 1041 as well as Schedule K-1. The fraudulent filings apply to partnerships as well as estate and trust forms.  Identity thieves are displaying a sophisticated knowledge of the tax code and industry filing practices as they attempt to obtain valuable data to help file fraudulent returns. Stolen Employer Identification Numbers (EINs) are being used to file such returns, open lines of credit and obtain credit cards.

Businesses should be alert for potential identity theft and contact the IRS if they experience any of the following:

  • Extension to file requests are rejected because a return with the EIN or Social Security number (SSN) is already on file;
  • An e-filed return is rejected because a duplicate EIN/SSN is already on file with the IRS;
  • An unexpected receipt of a tax transcript or IRS notice that doesn't correspond to anything submitted by the filer; or
  • Failure to receive expected correspondence from the IRS because the company address has been changed.

To help verify the legitimacy of tax return filings, the IRS will be asking for additional information from businesses and tax return preparers in 2018.  The following questions will be added for tax return filings in 2018:

  • The name and SSN of the company executive authorized to sign the corporate tax return. Is this person authorized to sign the return?
  • Payment history - Were estimated tax payments made? If yes, when were they made, how were they made, and how much was paid?
  • Parent company information - Is there a parent company? If yes, identify it.
  • Additional information based on deductions claimed
  • Filing history - Has the business filed Form(s) 940, 941 or other business-related tax forms?

As another tax filing season kicks off in a month or so, small businesses should be aware  of identity theft signs and be vigilant in protecting company EINs and other sensitive company data.

For more information, please contact Schneider Downs.  

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

What to Expect During a Sale Transaction
Coronavirus, Tax BY Jacob Clark
Ohio Unemployment Benefits for Self-Employed and 1099-Misc Filers
IRS Announces 2019 Marginal Well Credit
Data and Technology Research Project Spotlight
Individual Tax Planning Under COVID-19
Cash Flow and Liquidity Planning Opportunities

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office
Pittsburgh

One PPG Place, Suite 1700
Pittsburgh, PA 15222

contactsd@schneiderdowns.com
p:412.261.3644     f:412.261.4876

Map of Columbus Office
Columbus

65 East State Street, Suite 2000
Columbus, OH 43215

contactsd@schneiderdowns.com
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102