Tax scams can be detrimental to small and medium-sized businesses (SMBs). Scams can harm your business finances and reputation. To help you avoid business tax scams, we compiled our top tips.
Learn Scam Trends
The first step to avoiding business tax scams is to learn about them, including common scams and the latest scam trends. Check out our lists of the top 10 Tax Scams SMBs Need To Watch Out For and other tax scams you should be aware of.
Visit Government Websites
When looking to apply for an EIN, for example, or respond to a request from the IRS, make sure to do so through the correct government website. The IRS website is at https://www.irs.gov/. Be sure to look for the banner at the top of the page that says, “An official website for the United States government.” State government websites also end with “.gov” but local governments may not.
If you receive a tax letter that lists any other URL, it is likely spam.
Verify Identity
Always verify the identity of individuals or organizations requesting sensitive tax information. Ask for these details:
- Full name
- Contact information, including phone number and email address
- Credentials, such as a Certified Public Accountant (CPA) license or Enrolled Agent (EA) designation
- Official documentation, such as a letter or notice for the tax authority
Also, be aware of how different entities will contact you regarding your tax information. For example, the IRS will always mail tax documents to you, and they will never call, text, email, or contact you via social media to demand payment or discuss your taxes. The only exception to this rule is if the IRS has already sent multiple letters asking you to pay your tax bill, but even those calls are rare.
If you are contacted by a third-party debt collector and you owe back taxes, you will first receive a letter in the mail from the IRS letting you know that the collection agency will contact you to collect the debt. If you have not received such a letter from the IRS or you do not owe back taxes, it is a scam.
If you are ever unsure, contact the tax authority directly. You can contact the IRS using these details.
Use Secure Communication
When handling sensitive tax information, it is essential to utilize secure communication methods to guarantee the confidentiality and protection of the data from unauthorized access or interception.
Ways that you can secure your communications include:
- Encrypted email
- Secure file transfer service
- Password-protected files
- Secure web portals
Install Reliable Security Software
Invest in robust antivirus and anti-malware software to protect your computer systems and networks from phishing attempts and malware. If you are choosing a solution for your SMB, it’s best to purchase a premium tool because it protects against both known and unknown threats, while free security software solutions only protect you from known threats.
Regularly Update Software
Updating your technology doesn’t just provide the latest features – it also provides you with the latest security patches to minimize vulnerabilities in the systems you use. So, it’s important to keep your operating systems, software, and applications up to date on any device that accesses sensitive data, such as tax or other financial information.
Implement Strong Passwords
Enforce strong password policies for all business accounts and use multi-factor authentication (MFA) whenever possible – for online accounts and documents that contain sensitive data. MFA provides an additional layer of security, which can keep hackers out and make it harder for an employee to share sensitive information with the wrong people.
Be Cautious with Emails
Beware of unsolicited emails, especially those asking for personal or financial information. Do not click on links or download attachments from unknown sources.
If you receive a suspicious email that says it’s from the IRS, forward it to phishing@irs.gov.
If you receive an email that is requesting sensitive information and it seems to be from someone you know, such as your tax professional, contact that person directly via a phone call or in person to confirm the request.
Consult a Trustworthy Tax Professional
To ensure that you are complying with tax regulations and are not falling victim to fraudulent schemes, seek advice from a qualified tax professional or accountant.
It’s best to partner with a trustworthy tax professional before you run into any potential tax scams, which means that if you don’t currently have one, we recommend connecting with one as soon as possible.
Educate Your Team
Now that you are aware of scam trends and what to do when you come across a scam, it’s time to educate your team. Train them to recognize suspicious emails, phone calls, and messages. Don’t forget to provide them with next steps when they spot spam, whether that is to inform IT personnel, delete an email, or take another action. Be sure to document the policies and action steps, too, and provide those details to your team so they have a quick reference at the ready.
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