How an Accountant Can Help You Avoid Payroll Fraud

Payroll Fraud Employee Accountant Tax Business

Payroll Fraud

We have all heard the nightmare stories of people who have had their identities stolen, their tax refunds taken away, and a host of other stories all surrounding fraudulent activity. While sometimes bad things happen to good people and can’t be avoided, there are ways that hiring an accountant can help you when you’re attempting to avoid fraud.

Here are four ways your accountant can help you avoid payroll fraud:

Schedule Frequent Audits

Having an accountant schedule frequent audits for your business is a great way to make sure you avoid payroll fraud in the future.  The more frequently audits are scheduled through the year, the lower your chances of fraud will be. If you really want to make sure that your audits are helpful, consider having your accountant schedule a few surprise audits as well.

Establish Checks and Balances

It doesn’t matter how big or small your organization may be, checks and balances are always important. That’s why it’s even more important to have one specified accountant readily available to help make sure you are setting up new hires, processing payroll and reconciliation throughout the year.

Train Employees How To Look Out For Fraud

One of your greatest assets is your team of employees. In many cases, extreme fraud may not be easily identifiable if you are out of touch with the day to day operation of your business. An accountant can work with you to make sure you train employees how to look out for fraud and even how to stop engaging in unintentional fraudulent behavior.

Encourage Honest Communication

Another great way that an accountant can help your company is by establishing an honest communication system. Many payroll departments have an accountant who sets up an employee hotline that allows employees to not only report fraud but report it without worrying about possible repercussions and retaliations from other employees in your department.

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What Happens if Someone Steals Your Tax Refund

Tax refunds are not just stolen from mailboxes and bank accounts. Some thieves go a step further and steal a person’s entire identity, even filing taxes under their name. This allows the thief to have a refund sent to their banking institution rather than yours. Here’s a “to do” list for anyone who experiences the misfortune of having their tax refund and identity stolen.TaxRefundCheckPic

Report Fraud Immediately

The minute that you are aware that you are a victim of fraud or tax refund theft, contact the IRS to report it. This gets the ball rolling and the IRS can begin tracking down where your money went and who stole it. Waiting even one day to report fraud can lead to it taking more time to remedy the situation.

Gather Proof of Identity Documents

You will have to provide proof of identity documentation to the IRS. This means that you will need to submit a copy of your birth certificate, social security card, photo ID, and in some cases, marriage licenses. It is frustrating to have to prove that you are yourself, but the IRS cannot complete their investigation without this information.

Cooperate with the IRS

The IRS can work faster in their investigation when you cooperate. Spend the extra couple of dollars to have items faxed rather than mailing them. The IRS is going to ask a lot of personal questions, and it is important that you answer them directly.

Keep in mind that this is a process and will take some time. This can delay your tax refund for quite some time. In rare cases, it can take until the next tax year to resolve the issue.

Image credit: Westside Properties

Common Mistakes Which Can Lead to Tax Identity Theft

Tax identity theft is a serious issue. It can lead to a loss of money and trouble with the IRS for you. There are people who have had their identities stolen and it’s resulted in years of problems, both with the tax authorities and with their finances.IdentityTheftPicTwo

There are ways to avoid tax identity theft, and it all begins with knowing how it happens in the first place.

Don’t Shred Personal Documents

Criminals will search the trash in order to find documentation, including account numbers and social security numbers. Using this information, they can build up a profile of you. When they have enough, they can steal your identity and commit fraud in your name.

Giving Information to those Who Don’t Need It

Another common way is giving your information out over the phone and online. Senior citizens tend to fall for this most often of all. Someone will call claiming to be from an official or reputable organization, including the bank. They will ask for their information and they will give it out.

No genuine organization will ever request this information from you.

Use a Bad Quality Tax Preparer

There have been cases where tax preparers have stolen the IDs of previous clients and filed on their behalf. They pocketed the tax refunds before the actual person could file their return. Before they knew what hit them, the tax preparer had already run away with the money.

This is why we can’t emphasize enough how important giving out your personal information to only a qualified professional with a strong record of accomplishment is.

Image credit: glenn.mcknight

Three Ways to Protect Yourself from Tax Fraud & Identity Theft

IdentityTheft

While identity theft and tax fraud can occur during any time of the year, when tax season kicks off they are the most prevalent. Recovering from identity theft or tax fraud can be emotionally and mentally draining; for this reason we will identify and discuss some ways to protect yourself from it.

E-File

E-filing is safer than sending a paper return in the mail. While it may seem like hackers are hacking into numerous websites these days, the IRS has a secure website. When you put a paper return in the mail, someone can steal it easier and redo your return so your refund comes to them. Furthermore, once they have your personal information they can go open credit cards, make expense purchases, and more.

Direct Deposit Your Refund

Waiting for a check in the mail not only delays the time that it will take for you to receive your refund, but it also puts you at risk of having the check stolen. While it may seem as though it would be hard to cash another person’s check in your mind, scammers know how to get around that small hurtle quickly. You should never want your personal information floating around in the mail system.

Use Credible Software/Agencies to File

Filing taxes may seem pricey, especially if you are not expecting a refund. However, you should never go for a deal that sounds too good to be true from a company that is not credible. Remember the person who files your taxes or the software you use to file them yourself, will have your personal information. When giving out or entering your personal information you have to make sure it is not going into the wrong hands.

Image credit: Got Credit

  • Huddleston Tax Accountants / Huddleston Tax CPAs – Redmond, WA
    Certified Public Accountants Focused on Small Business
    8201 164th Ave NE Suite 200 / Redmond WA 98052
    425-483-6600

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve Tukwila, Auburn, Federal Way. We have a few meeting locations. If you are looking for a Redmond CPA firm, get in touch with us! Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.