Don’t Get Scammed: How to Spot and Avoid Business & Tax Scams

Don’t Get Scammed: How to Spot and Avoid Business & Tax Scams

Scammers are getting sneakier by the day. Small business owners and taxpayers are prime targets. From phishing emails to fake IRS calls, falling victim to a scam can cost you time, money, and peace of mind. The good news? You can protect yourself by learning what to watch for and how to respond.

Common Business & Tax Scams to Watch Out For:

1. Fake IRS or Tax Agency Calls Fraudsters may impersonate IRS agents, threatening arrest or legal action if you don’t pay immediately. Remember: the IRS never demands payment over the phone or asks for gift cards or wire transfers.

2. Business Registration Renewal Scams You might receive official-looking letters or emails warning that your business registration is expiring. These often urge you to pay a fee to a third party. Always verify such notices through your state’s official website.

3. Tax Preparer Fraud Some unethical preparers inflate deductions or misreport income to boost your refund, putting you at risk for audits and penalties. Work only with qualified professionals who hold a PTIN, CPA license, or EA designation.

4. Phishing Emails These emails often mimic communications from the IRS, QuickBooks, banks, or vendors. They may include links or attachments designed to steal personal or financial information. Don’t click, verify first.

5. Fake Invoices or Payment Requests Scammers may pose as vendors, sending fake invoices or asking you to update payment details. Always confirm the legitimacy of payment requests before sending funds.

Red Flags That Should Make You Pause

🚩 Urgent demands for payment via gift cards or wire transfers

🚩 Unfamiliar or suspicious email addresses and phone numbers

🚩 Grammatical errors or odd formatting in messages

🚩 Requests for sensitive data (e.g., Social Security numbers or EINs) by email or phone

🚩 Hyperlinks that don’t match official website URLs

How to Protect Yourself & Your Business

✅ Use reputable financial and tax software

✅ Verify all payment and tax-related communications

✅ Partner only with credentialed tax professionals

✅ Train your team to recognize and report scams

✅ Enable two-factor authentication on financial accounts

✅ Report suspicious activity to the IRS (phishing@irs.gov) or the FTC

🔍 Examples of Business & Tax Scams to Watch Out For

1. The Fake IRS Notice What happened:

A small business owner received a letter on official-looking IRS letterhead demanding immediate payment for an “underreported income” penalty. It instructed her to pay via wire transfer to avoid further action. She panicked and paid, only to later find out the IRS doesn’t accept wire transfers, and the notice was fake.

Red flag: The IRS never contacts taxpayers by email or demands payment without proper notices or appeal rights.

2. The “Vendor Invoice” Scam What happened:

A bookkeeper for a construction company received an invoice from a supposed tool supplier they didn’t recognize. The invoice included a legitimate-looking logo and matched the format of their usual vendors. It was paid… and they never heard from the “supplier” again.

Red flag: Always verify unknown vendors, especially if you’ve never ordered from them. Contact the vendor directly using a known phone number or email.

3. The W-2 Phishing Scam What happened:

An HR manager got an email from someone impersonating the company CEO, asking for employee W-2s “for tax reporting.” The sender's name matched the CEO’s, but the email address was off by one letter. The HR manager sent all the employee data without confirming the request.

Red flag: Scammers often spoof executives. Always verify sensitive requests through a second channel (e.g., phone call or Slack message).

4. The “Tax Preparer” Who Vanishes What happened:

A new tax preparer promised a business owner a “huge refund” by inflating deductions. The return was filed, the refund was issued—and the IRS later audited the business. Turns out, the preparer used false expenses and disappeared when contacted.

Red flag: Avoid any preparer who promises large refunds without reviewing your records. Always sign your return and make sure your preparer has a valid PTIN (Preparer Tax Identification Number).

Final Thoughts

Scammers are clever, but you’re smarter. Staying vigilant and informed is the best way to guard against business and tax fraud. When something feels off, pause and verify. And remember, the KB2 Bookkeeping & Tax team is always here to help you navigate safely.

Let’s keep your business secure and scam-free.