Protecting Your Business from Tax Scams: Insights During International Fraud Awareness Week
Report Suspected Fraud
If you suspect fraudulent activities or abusive tax schemes, report them using IRS Form 14242.
NCF also encourages consultation with tax professionals for guidance.
The Imperative of Vigilance
As part of International Fraud Awareness Week, the IRS is reinforcing the importance of protecting personal and financial data from fraudsters and tax scheme architects. This reminder is critical for individuals, businesses, and especially small businesses like those we serve at Ntare Consulting and Finance (NCF).
Understanding IRS Warnings
The IRS highlights two areas of concern: micro-captive insurance schemes and improper Employee Retention Credit (ERC) claims. These strategies, often included in the IRS’s “Dirty Dozen” list, are used by scam artists to exploit taxpayers.
Micro-Captive Insurance Schemes
Micro-captive insurance arrangements allow businesses to insure themselves but have been misused as tax shelters. The IRS is cracking down on these arrangements, emphasizing the need for businesses to use them legitimately and remain compliant with tax laws.
ERC Claims Pitfalls
The IRS has observed incorrect ERC claims, warning against scam promoters offering quick eligibility checks and charging fees based on the credit amount. Businesses must exercise caution and consult with trusted tax professionals before filing ERC claims.
Red Flags to Watch For
The IRS cautions against IRS impersonation scams, which include fake emails, texts, social media messages, and phone calls. Key signs of these scams include:
Requests for personal information via unorthodox communication channels.
Demands for immediate payment through specific methods like prepaid debit cards or wire transfers.
Threats of law enforcement action for non-payment.
Best Practices for Businesses
NCF advises businesses to:
Employ Multi-factor Authentication: This adds an extra layer of security beyond just passwords.
Regularly Update Security Software: Keeping software updated is crucial in protecting against the latest cyber threats.
Back Up Important Files: Regular backups can prevent significant data loss in case of a cyberattack.
Use Strong Passwords and Encrypt Devices: This helps in protecting sensitive business and customer information.
Stay Informed: Awareness of the latest tax scams is key in protecting your business.
Conclusion
At NCF, we are committed to helping our clients navigate the complexities of tax compliance and fraud prevention. During this International Fraud Awareness Week and beyond, we stand ready to assist you in safeguarding your business against these evolving threats.