Fact Checked by Editorial Staff 
The biggest fear among business owners is ‘what if my tax ID gets stolen?’ The fear is real, as it leads to the destruction of the company. Tax ID theft is not only a growing crime across the globe, but criminals never leave any chance to steal your Employer Identification Number (EIN). There is no surprise that the results are horrendous, even if it is just a small or medium-sized business.
The IRS (Internal Revenue Service) works relentlessly to prevent any such theft. Alongside, it also falls on the business owner to be more careful when receiving any malicious email or phone call. Let’s dig into some warnings and cautions on how to save your business from tax ID theft here in this article.
- Tax ID Theft is a growing problem across the globe.
- The IRS has taken several measures to prevent tax ID theft.
- A few steps you can take to protect your tax ID and other confidential information.
- Contact IRS immediately if you notice of phishing or data breaching in your business.
How to Save Your Business From Tax ID Theft?
Criminals often try to steal the Tax ID number or EIN to get hold of the business they are not part of. The most common reason is to get hold of the money or assets that the company or owners have. This is frequent and quite common within the business world, no matter how big or small the businesses are.
Once they successfully get access to your TIN or EIN, they can access your company’s insights, bank accounts, credit cards, and other confidential information. The result is, of course, not pleasant for either the business or the owner. To understand how we can protect our businesses from getting stolen, it is important to know how theft takes place.
How to Know if Tax ID Theft Takes Place?
Criminals have several ways to get into your sleeves when it comes to stealing your identity. The IRS has issued notices and warnings to all the businesses (small, mid, or large), making them aware of fraudulent activities. Check out some of the warnings you need to be careful about while managing your business.
- Frequent tax filing rejected by the IRS.
- Received an EIN that you never applied for.
- Received an unrecognised income alert from the IRS.
- Received Letter 6042C or 5263C from the IRS.
- If anyone offers help with your IRS online account.
- New account alert that you never created.
- Log in or change a password alerts while you’re away from your devices.
- Unemployment benefits or any types of wages that you never earned or applied for.
- Unauthorised payroll filings, such as Forms 941 or W-2.
These are some of the warnings that the IRS issued on their official website to raise awareness among businesses of all sizes.
Steps to Protect Your Business
There are some steps you can take to prevent tax ID theft. These are common practices that you must be careful about. These seem to be very basic, but they have their own weightage when it comes to protecting your business and tax ID.
Secure Your Electronic Devices
The very first and basic thing you must do is to secure your electronic devices, such as your mobile phone and computer. You must have anti-virus software installed on your devices, but it is wise to be extra careful. Any email, text, or message can harm your device without you knowing. Suspicious links that may breach your device data and information if you mistakenly click on them. Hence, it is important to focus on device security throughout.
Get an EIN for Your Business
Every business has to get an EIN, whether it is an LLC, a Corporation, or a General Partnership. However, if there is a sole proprietorship, you can easily avoid getting an EIN and continue working with your Social Security Number (SSN). But it is safe to get an EIN even if you don’t have to.
For a sole proprietorship, even if you don’t need to get an EIN, you should. A small business, running from home, or making a small revenue, still needs to protect the company. It is safe to run a business using an EIN or TIN, even if the company does not fall under the tax limit.
Identity Protection PIN (IP PIN) to Secure Tax Return
The IRS provides an Identity Protection PIN (IP PIN) to taxpayers who can validate their filing. This helps them secure their tax return. It is a six-digit number provided by the IRS. No one other than the IRS and you will know about the number. This number prevents any other person (except you) from filing the tax return using your SSN or ITIN. In case an identity theft takes place, this IP PIN will help an individual to get back their tax ID safely.
Avoid Malware and Phishing Email/Messages
An email or text with malicious links or malware is a common thing we receive every day on our phones. Some of them don’t look like spam, and we mistakenly click on those links and end up losing confidential information. Besides, downloading online documents, movies, music, or anything that is not from an official site but from a pop-up link will be a direct call to malware.
Usually, phishing emails have clickbait like, ‘your account is frozen, activate now!’, ‘Get a discount, right now!’, etc. Clicking on them and getting into a malicious website/app makes things complicated. Not only you, but also if the device has multiple users, like family members who use the same computer, should be aware of such phishing emails.
Set up Internal Access Control for Employees
Internal control for employees is also required, along with other security measures. In any company, it is absolutely necessary to set a restriction on accessing all the files by employees. Not all employees should get access to confidential files like the client list, company audit files, accounts, etc.
These documents are confidential and can easily be breached if the employees have easy access to them. It is needed to restrict those files or documents to a handful of people if only required. Even if it is a small set-up with not-so-many employees, well-structured internal restrictions make things pretty safe. Someone shared on their social media about receiving an online order from a random person. As the duo designer felt it was ‘fishy’, they tracked down the card from which they received their payment and contacted the owner of the card. Later, they found out the order never came from the owner of the card but someone else they didn’t know.
Anyone from anywhere can breach your information (especially in this tech era where encryption and digital scams are growing together side-by-side). As a business, it is important to be extra careful, even with your trusted employees, as it can take away everything from you overnight.
Make Everything Password-Protected
This is another common measure that we all try our best to achieve. Making everything password-protected is something everyone should take care of. Confidential files, documents, and any file that contains company insights should be password-protected.
Most of our files are digitally saved today; hence, it is one of the best safety solutions for your tax IDs to be protected. When you protect everything with a strong password or keep your documents encrypted, you have very few chances of being robbed.
Get a Professional Tax-Tech Expert
A professional tax expert who is also experienced in tech can watch over things for you. Monitoring data exchange, regularly updating security software, and examining every loophole in the system to secure the confidential data – someone who can do all of them for you. A bunch of professionals are out there; you can outsource or can hire someone in your company.
For a small-sized company, hiring a full-time employee may not be a cost-effective plan. Hence, outsourcing it would be a cheaper plan.
What to Do if Your Tax ID Gets Stolen?
Even after making so many efforts, sometimes, criminals get through your protected files. In such extreme cases, you have a few things to do.
- Inform the IRS as soon as possible. They have a proper identity theft guide to help you out.
- Inform your bank, insurance agent (company), and other financial institution your business is associated.
- Inform Dun & Bradstreet if you have applied or have already received your DUNS number.
- Inform local authorities, such as government offices and agents
- Get an attorney or tax expert to take things further on the legal front. Meanwhile, you can request the email and document copies that the criminal used to do business unlawfully under your brand/business name.
In Conclusion
Tax ID theft is one of many digital crimes that are happening all over the world today. As fast as we are moving towards digital dependency, crimes are growing alongside at an exponential rate. Clickbait, phishing emails/texts, fake calls, where some random person impersonates an IRS representative, or an insider, who can crack your password easily – data theft can take place in any way, sometimes in the most unimaginable way. It is extremely important to be extra careful when handling your confidential files.
Checking every email that comes from the IRS, Dun & Bradstreet, your banks, or other financial institutions should be on your priority task list. Any suspicious email from any authority asking for more details on something that you have never applied for/asked for should immediately be reported to the authority. Get a tax expert to watch over your daily activities and report as soon as they notice something suspicious.