Hey there, Side Hustle Playbook readers! Tax season is a busy time for small business owners and work-from-home entrepreneurs, and unfortunately, it’s also prime time for tax fraud. The good news? The IRS has rolled out new tools, like the Identity Protection PIN (IP PIN), to help protect your sensitive tax information. Let’s dive into how you can stay secure this season and beyond.
What Is an IRS IP PIN?
The Identity Protection PIN is a six-digit number issued by the IRS to prevent identity thieves from filing a fraudulent tax return in your name. Think of it as an extra layer of protection for your tax identity. Even if someone gets hold of your Social Security Number or EIN, they can’t file without this PIN.
- Who Can Use It? Originally for confirmed identity theft victims, the IP PIN program is now available to all taxpayers, including small business owners and sole proprietors.
- How to Get One? You can apply for an IP PIN through the IRS Get an IP PIN tool. Be sure to keep it secure—only you and the IRS should know this number!
Why Is This Important for Small Businesses?
Fraudsters often target business owners for their higher tax returns or large deductions. Without an IP PIN, identity thieves could file a return under your name, causing months (or years) of headaches. The IP PIN stops this dead in its tracks.
Additional Steps to Protect Your Tax Return
While the IP PIN is a fantastic tool, it’s just one piece of the puzzle. Here are other essential steps to safeguard your business:
1. Strengthen Cybersecurity
- Update Software Regularly: Keep all tax-related software and devices up to date to protect against vulnerabilities.
- Use Strong Passwords: Ensure all your tax-related accounts have unique, complex passwords.
- Enable Multi-Factor Authentication (MFA): Most tax preparation software and online IRS accounts now support MFA for added security.
- Encrypt Data: Secure sensitive files on your computer or in the cloud with encryption.
2. Beware of Phishing Scams
Fraudsters often send fake emails pretending to be the IRS. Remember, the IRS never initiates contact via email, text, or social media. If you receive a suspicious message, forward it to [email protected].
3. Monitor for Fraud
Signs of tax identity theft include:
- Notices about a tax return you didn’t file.
- Rejection of your e-filed return because another return was filed under your name.
- Unexpected IRS account activity.
If you spot anything unusual, contact the IRS immediately and file Form 14039, Identity Theft Affidavit.
How to Educate Your Team
If you have employees or contractors, make sure they’re aware of these protections, too. Tax fraud can impact them and your business if sensitive data isn’t handled securely. Share tips on:
- Spotting phishing attempts.
- Safeguarding business and personal data.
- Using the IRS IP PIN for additional security.
Protect Your Hard Work
Your small business represents your dreams, time, and energy. By using tools like the IRS IP PIN and following best practices for tax security, you can minimize risks and focus on growing your side hustle.
For more resources and updates, check out the IRS Dirty Dozen scams list and follow us here on Side Hustle Playbook for tips to protect and grow your business. Let’s keep your hard-earned money safe this tax season!
