With tax season firmly upon us, thoughts inevitably turn to W-2s, 1099s and looming deadlines. But what if there was a bigger threat than scrabbling to update records, locate documents and meet deadlines? What if your main concern was vigilance in the face of tax season scams?
If you work with accountants in Miami, you might already be aware of the W-2 scam; if you aren’t, they almost certainly will be. Let’s take a closer look:
How the W-2 scam works
Your HR or payroll team receive an email that looks as if it’s legitimately from the company CEO or a senior executive. Brief and urgent, it asks for copies of all W-2s for employees to be sent for an accountant meeting. Nothing looks untoward or suspicious, so the W-2s are sent as requested.
However, a criminal using a similar domain or spoof address sent the email, and that person now has access to all the information needed for identity theft and the filing of fraudulent tax returns.
Timed to perfection with W-2 requests expected every February, why they are being asked for now, isn’t questioned by anyone. Couple this with the fact that the request isn’t an unreasonable one, and the sender appears to be legitimate, and you’ve got yourself a highly effective scam.
Here’s what happens next
An employees tax return is rejected when they go to file it, the reason given is that a return in their name has already been filed; the criminal is sitting pretty with their refund – imagine this level of confusion and fear among an entire workforce!
More than just a security problem, this is a nightmare for HR, with the potential for lawsuits and serious reputational damage.
Protecting your business from this type of scam
Fortunately, this type of scam is preventable, and involves policies and company culture rather than the latest technology.
Begin by adopting a rule that W-2s are never sent by email, no matter who is asking for them. If you do receive a request for such documents via email, verify the sender by other means than replying to the mail, and don’t be afraid to question; verification should become company policy, not a burden.
Make payroll and HR teams aware of potential scams before tax season, and make sure that multi-factor authentication, or MFA, is used for accessing all employee-related data.
Working with a tax accountant in Miami can provide you with an added layer of security, as their experience and expertise is used to help identify scams and protect you against them.
W-2 scams may well be the tip of the iceberg. The days and weeks leading up to April are prime time for fake IRS notices, phishing emails, spoof messages and fraudulent invoices, all designed to trip you up while you’re distracted with tax season. To get through tax season without falling prey to a scam is made easier when companies have strict security policies and systems in place, and train their teams extensively. Working with tax specialists can also be incredibly helpful, as they can even carry out a tax season security review if needed.