The Basics of Business Tax Scams
It’s no secret that taxes can be confusing and stressful for business owners. Unfortunately, there are also a number of scams out there specifically targeting businesses and their tax obligations. As a business owner, it’s important to be aware of these types of scams. Scammers might pose as the IRS, an accountant or an employee, but they all have the same goal: to cheat you and your business out of your hard-earned money.
Common Types of Business Tax Scams
- Phishing Scam: Someone posing as the IRS or another tax authority contacts a business owner and requests personal or financial information. This information is then used to commit identity theft or fraud.
- False Promise Scam: Someone promises to help a business owner lower their taxes in exchange for a fee. However, these services are often not legitimate and the business owner ends up paying more in taxes than they would have without the help.
- W-2 Scam: A business owner is contacted by someone posing as an employee or contractor and requests a W-2 form. This form is then used to file a false tax return and claim a refund.
Risks Associated with Business Tax Scams
- Financial Losses: Business tax scams can lead to hefty financial penalties and even jail time. Typically, these scams involve falsifying or exaggerating deductions on your taxes in order to get a larger refund.
- Loss of Sensitive Data: These scams can put your business and personal financial data at risk. They often involve falsifying or altering records in order to “frame” someone for a crime, or stealing personally identifiable information from businesses and individuals in order to commit fraud, identity theft and other crimes.
- Damage to Reputation: If your business is caught up in a tax scam, it could damage your reputation and make it difficult to attract customers or secure financing. This is especially true if the scam is publicized in the media.