ETAAC report discusses how payroll can fight fraud


The IRS is still trying to protect taxpayers from identity theft – and soon, the agency may give Payroll a bigger role in fraud prevention.


According to the latest annual report from the Electronic Tax Administration Advisory Committee (ETAAC), the agency should prioritize working more closely with Payroll to fight fraud and boost cybersecurity.


Reason: While individual tax return fraud is on the decline, rates businesses are climbing. And Payroll’s regularly being targeted for scams.


Seat at the table


To boost awareness of these schemes and come up with effective solutions, ETAAC wants the IRS to start including Payroll in its Security Summit, which currently consists of representatives from state tax agencies and other parts of the tax industry.


The committee said Payroll should be more involved in data reporting so the IRS can better identify the elements of the payroll process that are most vulnerable to fraud.


Eventually, this may lead to more safeguards built into common payroll tasks (such as Forms 94x submission) designed to verify the employer’s identity and make sure no unauthorized returns are submitted on a company’s behalf.


Along with Payroll, ETAAC is encouraging the IRS to reach out to more business in general to discuss identity theft and tax return fraud as well as prevention strategies.


It also wants the agency to create simple procedures to resolve fraud and implement measures designed to quickly alert business taxpayers about potential identity theft.


Improving e-filing


Per the report, electronic filing is one of the best ways to prevent identity theft, but e-filing rates are still low for business tax returns.


With that in minds, ETAAC said the IRS should continue its focus on boosting e-filing rates for Forms 94X by looking at ways to streamline the process, since the confusing requirements may deter business from e-filing.


Rather than forcing businesses to file returns electronically through the current process, ETAAC said the IRS should work with Payroll and other stakeholders to make it less complicated.


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