• 14 November, 2020
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IRS Announces Move To Protect Businesses From Identity Theft

The U.S. Internal Revenue Service (IRS) has announced today that sensitive information will be masked on all business tax transcripts starting next month to protect companies from identity theft.

Business identity theft happens when company owners or employees are impersonated by third parties in the process of committing fraud such as illegally obtaining cash, credit, and loans, leaving the business to deal with the resulting debts.

This type of identity theft occurs after fraudsters gain access to a business’ bank accounts and credit cards or following sensitive company information theft, including but not limited to tax identification numbers (TIN) and the owners’ personal info.

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New identity theft protection measures

“Moving to protect business taxpayers from identity theft, the Internal Revenue Service today announced that starting Dec. 13 it will begin masking sensitive data on business tax transcripts,” the government agency said.

Once sensitive data on business tax transcripts will start being masked, the IRS says that the new tax transcripts will only show the following info:

• Last four digits of any Employer Identification Number listed on the transcript: XX-XXX1234
• Last four digits of any Social Security number or Individual Tax Identification Number listed on the transcript: XXX-XX-1234
• Last four digits of any account or telephone number
• First four characters of the first, and last name for any individual (first three characters if the name has only four letters)
• First four characters of any name on the business name line
• First six characters of the street address, including spaces
• All money amounts, including wage and income, balance due, interest, and penalties

The new tax transcript will still contain an optional ID that matches the taxpayer (business or individual) to the transcript.

30-day notice for adjustments

This announcement provides all stakeholders with 30 days to make any adjustments to their tax filing and analysis processes.

Tax professionals were informed by the IRS about this incoming identity theft protection measure beginning as part of the Nationwide Tax Forums this summer.

The Treasury Department tax bureau previously began masking all sensitive information included in individual tax transcripts two years ago.

Last year, the IRS also published guidance to help taxpayers defend themselves against identity theft attempts while shopping online.

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Taxpayers were also urged by the IRS twice this year [1, 2] to enable multi-factor authentication (MFA) in tax preparation software to defend against data theft and hacker takeover attempts.