It’s no secret that identity theft is on the rise. In a news release dated July 25, 2017, the IRS discussed an increase in the number of business returns being targeted. Of those business returns filed through June 1, 2017, the IRS has identified approximately 10,000 as potential identity theft, compared to about 4,000 for calendar year 2016 and 350 for 2015. And while the number of returns affected may seem fairly low, the potential dollar amounts were incredibly significant: $137 million for 2017, $268 million for 2016 and $122 million for 2015.
The affected returns included corporate returns (Form 1120 and 1120S), partnerships (Form 1065) – especially related to their Schedule K-1s – and estate and trust returns (Form 1041). To help combat this growing trend, for tax season 2018, the IRS will be asking tax preparers and their clients to provide additional information with their tax returns. Some of the new information clients may be asked to provide when filing their business, trust or estate returns include:
- The name and Social Security number of the company individual authorized to sign the business return. Is the person signing the return authorized to do so?
- Payment history – Were estimated tax payments made? If yes, when were they made, how were they made, and how much was paid?
- Parent company information – Is there a parent company? If yes who?
- Additional information based on deductions claimed.
- Filing history – Has the business filed Form(s) 940, 941 or other business related tax forms?
In addition, the IRS provided a few clues that could signal your business has been the victim of potential identity theft. The issues include:
- Extension to file requests are rejected because a return with the Employer Identification Number or Social Security Number already on file;
- An e-filed return is rejected because of a duplicate EIN/SSN is already on file with the IRS;
- An unexpected receipt of a tax transcript or IRS notice that doesn’t correspond to anything submitted by the filer;
- Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.
If you recognize any of the above items, please contact your Somerset advisor at 317-472-2202 or as soon as possible so that together we may take appropriate action.
You can find a copy of the IRS News Release (IR-2017-123) here.
