Three Ways to Protect Employees Against TaxFraud

While few people enjoy paying taxes, even less want to suffer from tax fraud. Unfortunately, tens of thousands of U.S. taxpayers fall victim to tax identity theft each year. Suppose it happens to employees within your organization. The affected parties will spend many hours filing paperwork, sending emails, making phone calls, and taking other steps to remedy the situation. Much of that work needs to happen during office hours when the appropriate organizations are open. The extra work and stress can lead to lost productivity and even distrust in the workplace.

Tax fraud can happen at home and at work. Cybercriminals’ schemes can be wide-ranging and lucrative: from targeting Human Resources and payroll teams with W-2 phishing emails to calling employees pretending to be the Internal Revenue Service (IRS). There are three distinct ways that HR and management teams can help ensure their employees safely file their taxes:

• Education
• Awareness
• Benefits

On a departmental level, the employees most likely to be attacked by cybercriminals reside in HR, accounting and payroll. If they fall to a scam, these employees can expose the W-2 forms of everyone in the organization so educating them is imperative. By involving with the IT and InfoSec leaders, organizations can train these staff members on how to identify and report suspicious emails rather than clicking links or downloading attachments.

Companywide it’s advisable to inform employees on the best practices they and their families can use to avoid tax fraud. These include:

1. Filing tax returns as early as possible.
2. Filing tax returns electronically via a secure network.
3. Deleting unsolicited emails or SMS texts purporting to be from the IRS. The IRS does not initiate contact electronically, but will first contact individuals by mail.
4. Declining to provide personal or tax information over the phone.
5. Verifying the legitimacy of any new tax preparer before handing over personal documentation.

Not all tax fraud takes place online. In fact, many identity thieves still resort to low-tech methods like mail theft to steal people’s tax information. Informing employees when their W-2 forms are mailed out ensures they are on the lookout and can alert their employer if their form doesn’t arrive.

Organizations should also keep an eye on the latest fraud schemes being employed by criminals. The IRS regularly updates its consumer alerts based on reports from individuals and law enforcement agencies. The agency also offers timely reports like its annual Dirty Dozen list of tax scams.

Many savvy employers now offer supplementary benefits to ensure their employees file their taxes properly and on time. Some partner with trusted tax preparers who workers can use to have their taxes done professionally. This can either be fully paid or offered at a discount. Others partner with self-service tax preparation software to offer corporate discounts.

Identity theft protection is another rapidly-growing benefit with 80% of employers seeking recommendations for an identity protection vendor. Not only does identity theft protection safeguard employees during tax season, it also provides peace of mind throughout the year with 24/7 monitoring and identity restoration assistance if identity fraud does occur.

For more information about the risk of tax fraud, including how to report suspected instances of tax fraud, visit the IRS website on tax fraud alerts.