IRS Renews Warning of Form W-2 Scams Targeting HR and Payroll
Author: Robert S. Teachout, XpertHR Legal Editor
January 31, 2018
The IRS is again warning about an email scam that seeks to trick HR and payroll professionals into providing employees' Forms W-2 containing their personal identifying information, including names, Social Security Numbers and income information. The email falsely uses the name of an actual corporate officer within the target's own organization to request the information.
The scam, which emerged at this time of year in 2016, has resurfaced across the US now that payroll departments are busy filing the tax year 2017 W-2s with the Social Security Administration, and providing copies to each employee, by the January 31 due date. Not only the IRS, but many state tax agencies are warning HR and payroll professionals of the risk, and urging them to double check any executive-level or unusual requests for lists of Forms W-2 or SSNs, and to report any suspicious emails and online scams.
Individuals must include information from the annual W-2 form when filing their personal income tax returns. When cyber criminals obtain this identifying information, they use it to file fraudulent tax returns to obtain tax refunds.
The IRS explains that in this scam, sometimes referred to as business email compromise or business email spoofing, fraudsters posing as executives send emails to payroll personnel requesting copies of Forms W-2 for all employees. Often the contact will start with a short email asking the HR or payroll professional, "Hey, are you in the office today," followed by the request for W-2 information.
The IRS, state taxing agencies and the tax industry launched an initiative in 2017 for tax year 2016 W-2s using a new coding system that matches up W-2 forms with individual income tax returns filed so that fraudulent returns can be flagged before refunds are issued. Although they have made progress in the fight against tax-related identity theft, cyber criminals continue to use increasingly sophisticated tactics to try to steal even more data than ever.
To assist with these efforts, employers may be asked to respond to more IRS and/or state taxing agency income-verification requests than previously. Employers should be prepared to cooperate by providing the requested information on discs in the SSA's RW record format.
By alerting employers now, the IRS and its partners in the Security Summit effort (a coalition of representatives from the IRS, state tax administrators, the software industry, tax preparation firms, and payroll and tax financial product processors that have teamed up to combat identity theft tax refund fraud) hope to reduce the scam's success.