Business identity theft
According to the IRS, business identity theft is growing and individual identity theft or tax fraud is diminishing. Cybercriminals’ increased focus on breaching tax professionals’ systems and stealing client data is causing the increase in business and partnership return identity theft.
As of June 1, the IRS had identified approximately 10,000 business returns as potential identity theft in 2017, compared to about 4,000 for calendar year 2016 and 350 for calendar year 2015. While the number of businesses affected was relatively low, the potential dollar amounts were significant: $137 million for 2017, $268 million for 2016 and $122 million for 2015.
The affected returns included corporate returns (Forms 1120 and 1120S) and estate and trust returns (Form 1041). There also was an increase in identity theft related to the Schedule K-1 filings made by partnerships.
According to the IRS, business identity theft happens when someone creates, uses or attempts to use the identifying information of a business — without authority — to obtain tax benefits. Business identity thieves file fraudulent business returns to receive refundable business credits or to perpetuate individual identity theft.