A recent study by David Maimon, head of fraud insights at the cybersecurity company SentiLink, found that cybercriminals are now using fake businesses to steal. They convert stolen identities into fraudulent businesses, allowing them to obtain Employer Identification Numbers, open bank accounts, apply for business credit products, and file fraudulent tax returns while appearing legitimate to financial institutions and government systems.
By registering LLCs and obtaining legitimate EINs from the IRS, fraudsters create a veneer of legitimacy that bypasses traditional bank and government filters. Criminals steal identities to create fictitious companies, which they then use to apply for new credit lines and potentially engage in tax refund fraud.
This new type of fraud follows a four-stage approach that includes…
1 – Acquiring identities
2 – Registering LLCs
3 – Obtaining IRS EINs
4 – Then opening business lines of credit.
Because these businesses appear to be active in state registries in states such as Arizona and Colorado as well as federal tax systems, they often pass through the standard onboarding checks without being detected.
Sometime the fraudulent businesses also manage to hire employees who are unaware they are working for fictitious companies. They are then able to exploit those employees’ personal information to engage in tax fraud.
Once you have an EIN, you can start signing up employees, and begin applying for tax refunds. Identity theft and tax fraud have been a longtime problem for the IRS, but the EIN scam adds another dimension to it.
Let me leave you with this…
The IRS began offering an online tool on its website to help taxpayers understand and resolve tax debts. It’s designed to provide businesses and individuals with an easy way to research payment options and find their next steps.
It can be found at the following web address…
https://www.irs.gov/payments/get-help-with-tax-debt
The tool walks users through a series of straightforward questions about their financial situation and tax debt. It then guides them to potential payment and available resolution options.
These options may include payment plans, a temporary delay of collections, or an offer in compromise for those who qualify. Taxpayers do not have to enter personally identifiable information such as Social Security numbers, names, or addresses.
“I think the idea of being a digital-first agency is appropriate,” IRS CEO Frank Bisignano said Wednesday at a Senate hearing on the filing season. I have difficulty believing anyone at the IRS could say that with a straight face.
The idea of this in the first place is rather adorable. A collection agency is providing you with a tool that only helps them collect more money.
And we’re all supposed to believe the information they provide will benefit us? Why don’t you pull on this leg and see what comes out?
As always, if you’re having difficulties with your accounting and tax work, I’m waiting for your call.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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