Legal
IRS Moves to Protect Businesses from Tax Fraud
A new report from the Treasury Inspector General for Tax Administration details how the IRS is planning to detect and act on individuals using tax information from U.S. businesses frequently. The report, which is titled “Processes Are Being Established to Detect Business Identity Theft; However, Additional Actions Can Help Improve Detection,”
A new report from the Treasury Inspector General for Tax Administration details how the IRS is planning to detect and act on individuals using tax information from U.S. businesses frequently. The report, which is titled “Processes Are Being Established to Detect Business Identity Theft; However, Additional Actions Can Help Improve Detection,” discusses how identity theft affects businesses, and talks extensively about how the IRS plans to protect them from identity theft and tax fraud.
“Identity theft not only affects individuals, it can also affect businesses,” the report states in its introductory paragraphs.“The IRS defines identity theft as creating, using, or attempting to use businesses’ identifying information without authority to claim tax benefits.”
Many experts fear identity theft is a problem that’s difficult to police. Frank Abagnale, who many remember as the infamous conman played by Leonardo DiCaprio in Steven Spielberg’s 2002 film Catch Me If You Can, now helps law enforcement catch identity thieves. He even heads up his own firm called Abagnale& Associates.
“The police can’t protect consumers,” he once said.“People need to be more aware and educated about identity theft. You need to be a little bit wiser, a little bit smarter and there’s nothing wrong with being skeptical. We live in a time when if you make it easy for someone to steal from you, someone will.”
Abagnale also elaborated on why it’s such a common occurrence.
“Criminals look at identity theft and say only 1 in 700 criminals gets convicted of it,” he said.“And they look at check forgery and they know that for every 1,400 forgers arrested, only about 123 get convicted and about 26 go to jail. So the rewards are great, but the risks are very slim. So that’s one of the reasons that make it very popular.”
Near the conclusion of their report, the Treasury Inspector General for Tax Administration makes the following recommendations to the IRS:
“The IRS needs to take additional actions to increase awareness of business identity theft.
Although the IRS offers some outreach information through its tax forums, the information is limited. For example, there is minimal information provided to let businesses know how to identify potential identity theft, how to protect themselves from identity theft, and what to do and who to contact if they feel their identity has been stolen.
The IRS currently provides a significant amount of educational information regarding individual identity theft. Some of this information addresses business identity theft.”
By way of response, the IRS added a page to their website called Tax Practitioner Guide to Business Identity Theft. While applauding their efforts, the writers of the report insisted more action is still needed.
The IRS responded by stating they would continue to develop materials to protect businesses from tax fraud:
“The IRS agreed with this recommendation and is currently in the process of evaluating the content of outreach materials and other sources of information addressing business-related identity theft. It will identify areas for improvement and update the messaging accordingly.”
