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Watch Out for Business Identity Theft

By: Nestor Caballero CPA

With identity theft on the rise, no business can afford to ignore the signs that it has been targeted.

 What are the signs of possible business identity theft?

 Calls from debt collection companies

·         You receive a call from a debt collection company or other business out of the blue regarding expenses incurred under your business name without your consent.

 Notices or bills from the IRS

·         You receive a notice about nonexistent employees or about a closed or inoperative business which has no outstanding account balances.

·         An unexpected tax bill, unrequested IRS information, or an unexpected rejection or notice of deficiency arrives in the mail.

 Other indicators

·         Your extension-to-file request is denied because a return with your business’s employer identification number (EIN) is already filed.

·         Your e-filed return is declined because a return with the same EIN has already been filed.

·         You receive a tax transcript unexpectedly, or do not receive routine, expected correspondence.

How should you report suspected identity theft?

·         Contact the IRS using the contact information on the notice or letter you received if you believe your EIN has been used fraudulently.

·         Another option is to call the IRS’s business accounts line at 800-829-0115. If you’ve hired a lawyer to represent your company in the matter, he or she can call the Practitioner Priority Service line and ask for the correct department to discuss your issue and start an identity theft inquiry.

·         Contact the Taxpayer Advocate Service (TAS). Complete Form 911, Request for Taxpayer Advocate Service Assistance, and submit it to your local TAS office. If the TAS accepts the case, an identity theft investigation may then be undertaken by the IRS. For more information, visit the TAS website.

o   Note: Do not file Form 14039, Identity Theft Affidavit, which is for individuals seeking identity theft help.

If the IRS’s investigation detects identity theft in connection with your business, it will contact you. As the IRS researches the possibility of identity theft, it may send a letter or a form asking for details about your business. If you receive this type of correspondence, respond quickly and provide thorough information.

How can you proactively combat business identity theft?

·         Carefully watch both your personal and business credit reports.

·         Make it a habit to check your state records and keep your business records and any professional licenses updated.

·         Put safeguards in place, such as a free or paid credit-monitoring service that can alert you of any suspicious activity related to your business credit profile.