Business and Tax ID Theft, Essay Example

According to the commentary by Jennifer Primrose, businesses, clients as well as individual persons are sometimes in need of protection by CPA against identity theft that is attributed to tax information.  Just as individual tax payers are affected by tax-related frauds, businesses are not spared either. Jennifer Primrose has therefore found it prudent to issue warning signs that can facilitate in prevention of the fraud and take corrective measures when it arises.

Stephen and Sebastian also points at the high levels of identity theft as revealed by CPAs thus making electronic security an important issue. This form of fraud has been associated with a lot of misery to the tax payers due to the stolen identity and thereafter used to transact fraudulent activities. The account of the tax payer must therefore be corrected in time to avoid the cost to practitioners in terms of time and money during the busiest epochs of tax preparation cycle. Brian Naylor also reports that over 100, 000 taxpayers have been docuemented to suffer from stolen data according to IRS.

According to Jennifer Primrose, business related frauds are more complicated and are hardly noticed as compared to identity theft targeting individuals. The signs in business identity theft are similar to simple filing as well as processing errors. There is however some signs that when noted, further investigation is recommended.  For example, when an original tax return has been filed, the IRS may show that the same entry had paid the tax for that business in the same year. The IRS may also indicate a notice for a certain employee who is a stranger in that business. During the process of monitoring the business accounts as well as the IRS transcripts, other filings in the business with the government authorities and the credit reports, the client may notice some activities that are linked to an inactive business after full payment of account balance of the business entity. Some of these warning signs require that an action is taken

The recommended actions in business identity theft are similar to the case of individual identity theft. A quick response to IRS as well as immediate state notice is recommended. It is also prudent for businesses to file a fraud report with the nearest police department. The Federal Trade Commission and key credit bureaus must be contacted and a fraud alert placed and any account suspected with a fraudulent activity must be closed. Credit reports in the business, online information for business registration as well as account activity of the business with the IRS as well as government agencies must also be monitored regularly even if a business is closed. The computer security policies in the business must also be reviewed as well as updated.

It I also important to consider preventive measures and CPAS give some guidelines to prevention of such frauds. Annual monitoring of credit reports and the forwarding of IRS notices by the client are important preventive measures. The social security numbers must be truncated or masked with insurance cards. All financial information and social security cards must be safely kept and any document bearing SSN and any other account numbers must be disposed properly. The SSN and birthdates must be given only when absolutely necessary. Using a shredder is also recommended. Personal computers must be secured with firewalls, antivirus, anti spam software and passwords must be changed occasionally. Divulging personal information to social media may expose one to hackers. Opening unexpected emails and attachments is also a security threat and employees must also be educated oh phishing. The credit profile of the business must be monitored and tax returns should be filled during the appropriate time of the tax session. Any phishing emails purposed to originate from IRS must be forwarded to IRS website.

Works cited

Brian Naylor. IRS Reports Theft Of More Than 100,000 Taxpayers’ Information. 2010. http://www.npr.org/2015/05/26/409819379/irs-reports-theft-of-nearly-100-000-taxpayers-information

Jennifer Primrose. “Businesses and tax ID theft” 2015. http://www.journalofaccountancy.com/issues/2015/dec/business-tax-id-theft.html

Stephen Hammel, J.D., and Sebastian Murolo. Resolving the theft of tax clients’ identity,  2015. http://www.journalofaccountancy.com/issues/2015/sep/resolving-tax-id-theft.html#sthash.P01X10Zx.dpuf