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One problem that many business owners aren't aware of is tax identity theft. It can affect individuals and business entities alike.
Tax identity theft for businesses is a lot like identity theft when it comes to people, but instead involves a business' employer identification number, or other account information, being used for unauthorized purposes.
It can end up ruining your credit, disrupting your business, and costing a lot of time and money to clear up the mess.
Once a company's tax information is stolen, it can be used for many things. Sometimes, scammers will create fraudulent tax returns and claim false refunds. Other times, they use the identification to create tax shelters or other ways to hide their income.
Perhaps more commonly, criminals will use a business' identity to open credit card accounts and buy expensive merchandise like electronics, which they can then sell for cash to make a quick profit, according to the Colorado Secretary of State's office.
Businesses keep a lot of records and have many credit accounts, so it's easy to leave yourself vulnerable for identity theft. Especially during tax time, when you're filing and distributing all your tax forms, you'll need to know how to keep your information safe.
Here are a few tips:
If you need to report tax identity theft, go to the IRS' Identity Theft Protection Page. The IRS also has a hotline for identity protection: (800) 908-4490.
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Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.