The US Internal Revenue Service (IRS) announced at the end of last week that sensitive information will be blacked out on all business tax returns starting next month, in order to enhance security and protect companies from potential identity theft.
Business identity theft occurs when fraudsters impersonate the owners or employees of a company to carry out illegal activities, such as illegally obtaining cash, credit, and loans.
Identity theft of a business occurs after fraudsters gain access to its bank accounts and credit cards or after they steal its sensitive and confidential information, including tax ID numbers and the personal details of company members and customers.
To protect taxpayers from potential identity theft, the U.S. Internal Revenue Service announced that it will begin redacting sensitive data on businesses’ tax documents
According to the IRS, once sensitive data on businesses’ tax returns begins to be redacted, new tax returns will only display the following information:
- The last four digits of any employer identification number referenced in the copy: XX-XXX1234
- The four last digits of any social security number or individual tax ID referenced in the copy: XXX-XX-1234
- The four last digits of any account or phone number
- The first four characters of a person's first and last name (the first three characters if the name has only four letters)
- The first four characters of any name in the business name line
- The first six characters of the street address, including spaces
- All monetary amounts, including salaries and revenues, owed balances, interest and penalties
This announcement gives all interested parties 30 days to make adjustments to the filing and tax analysis procedures.
Taxpayers were informed by the IRS about this new identity theft protection measure that was launched as part of the National Tax Forums this summer. The Treasury Department's tax office began covering all sensitive information included in individual tax documents two years ago.
Last year, the IRS also released guidance to help taxpayers protect themselves from potential identity theft attempts while making online purchases. The IRS also twice this year urged taxpayers to enable multi-factor authentication (MFA) in their software to protect themselves from data theft and withdrawal attempts by hackers.
