3 Ways to Help Your Employees Defend Against Tax Fraud
Hundreds of thousands of U.S. consumers fall victim to tax identity theft each year. If it happens to one or more employees within your organization, the consequences are amplified as it’s worse than having a delayed refund. Whoever is affected will have to spend dozens to hundreds of hours out of work to file paperwork, send emails, make phone calls, and remedy the situation. This extra work, combined with the stresses of experiencing a highly-personal crime, leads to collateral damage in the workplace: lost productivity and even distrust.
Tax fraud can happen either at home or at work. From cybercriminals targeting your HR and payroll teams with W-2 phishing emails to scammers calling your employees pretending to be the IRS, their schemes are wide-ranging and lucrative. However, there are three distinct ways that Human Resources and management teams can help ensure their employees safely file their taxes: (1) Education, (2) Awareness, and (3) Benefits.
On a departmental level, the employees that will most likely come under attack from cybercriminals reside in HR, accounting, or payroll. And, if they fall for a scam, they can expose the W-2 forms of everyone in the organization. Partner with your IT and Information Security leaders to help further train these staff members on how to identify and report a suspicious email without clicking on it or downloading attachments.
From a company-wide perspective, share best practices with employees on how they can avoid tax fraud on an individual level. Here are five tips to help:
- File your tax return as early as possible, and do so electronically
- If you receive an email from the “IRS,” delete it — the real IRS never communicates electronically
- Never provide personal/tax information over the phone — it’s a scam
- If using a new tax preparer, be sure to verify their legitimacy before handing over your documentation
- When filing your taxes online, make sure you are connected to a secure network
Not all tax fraud takes place online. In fact, many identity thieves still resort to low-tech methods like mail theft or mail fishing to steal people’s tax information. Be sure to inform your employees when their W-2 forms are being mailed out, so they can be on the lookout and raise a red flag if it doesn’t show up.
You should also keep an eye on the latest methods being hatched by fraudsters so that you can make people aware. The IRS regularly updates its consumer alerts based on reports they receive from individuals and law enforcement agencies.
Many employers have begun providing supplementary benefits to ensure their employees are filing their taxes properly and on time. One such way is by partnering with a trusted tax preparer that workers can use to have their taxes done professionally. This can either be fully-paid or offered at a discount. The same goes for self-service tax preparation software, like TurboTax, that offers corporate discounts.
Identity theft protection is another rapidly-growing benefit that is expected to be offered by 63 percent of employers by 2021. Not only does identity theft protection safeguard employees during tax season, but it also provides peace of mind throughout the year and will help them recover in the event that identity fraud does occur.
If your business is interested in identity theft protection as a non-taxable benefit, start your evaluation by reading the 2019 Identity Protection Service Provider Scorecard by Javelin Strategy & Research — the industry’s foremost analysis of 20 different solutions.