The IRS, state tax agencies and private-sector tax groups are warning the nation’s business, payroll and human resource communities about a growing W-2 email scam that threatens sensitive tax information held by employers. These emails start with a simple, “Hey, you in today?” but by the end of the exchange, all of an organization’s Forms W-2 for employees may end up in the hands of cybercriminals. This puts workers at risk for tax-related identity theft.The W-2 scam emerged as one of the most dangerous and successful phishing attacks as hundreds of employers and tens of thousands of employees fell victim to the scheme this past year. It’s so bad that a special IRS reporting process has been established.Inroads have been made in reducing stolen identity refund fraud, so criminals now need more information to file a fraudulent return. That means they need more accurate data about taxpayers, causing them to target tax practitioners, payroll professionals and employers. The Form W-2 contains income and withholding information necessary to file a tax return.All employers are at risk. In 2017, the W-2 scam made victims of businesses large and small, public schools and universities, as well as tribal governments, charities and hospitals. The scam, which grows larger each year, will likely make the rounds again in 2018.The Security Summit warns employers – in public and private sectors – to beware of this scheme and to educate employees, especially those in human resources and payroll departments who are often the first targets.
One example: A crook will send an email to one employee with payroll access, requesting a list of all employees and their Forms W-2. The thief may even specify the format in which he wants the information. The subject line has hundreds of variations along the lines of “review,” “manual review” or “request.” Because payroll officials believe they are corresponding with an executive, it may take weeks for someone to realize data theft occurred. Generally, criminals are trying to quickly take advantage of their theft, sometimes filing fraudulent tax returns within a day or two.Because of the W-2 scam’s threat to tax administration for both federal and state governments, a special reporting process has been established to quickly alert the IRS and state tax agencies. Detailed reporting steps may be found at Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers.
Here’s an abbreviated list of how to report these schemes:
- Email dataloss@irs.govto notify the IRS of a W-2 data loss and provide contact information. In the subject line, type “W2 Data Loss” so that the email can be routed properly. Do not attach any employee personally identifiable information data.
- Email the Federation of Tax Administrators at StateAlert@taxadmin.orgto get information on how to report victim information to the states.
- Businesses/payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (gov). Businesses/payroll service providers may be asked to file a report with their local law enforcement agency.
- Notify employees so they may take steps to protect themselves from identity theft. The Federal Trade Commission’s identitytheft.govprovides guidance on general steps employees should take.
- Forward the scam email to phishing@irs.gov.
Employers are urged to put steps and protocols in place for the sharing of sensitive employee information, such as Forms W-2. One example would be to have two people review any distribution of sensitive W-2 data or wire transfers. Another would be to require a verbal confirmation before emailing W-2 data. Employers also are urged to educate their payroll or human resources departments about these scams.
Ransomware and Email Scams
Ransomware is when a hacker or a cyber terrorist steals your information or hacks into your system and holds your system or information hostage for money. In most cases they ask for bitcoins, which are untraceable.
How do you defend yourself?
- Regular backups of your server and website
- Stronger password management – NEVER use your office computer or office email password for any online passwords
- Antivirus software
- Employee training on what to watch for in potential email scams
Source: Gold Gerstein Group
