IRS Warns About Fake Payroll Direct Deposit, Wire Transfer and W-2 Scam Emails

December 17, 2018

The IRS is warning tax professionals about an uptick in phishing emails involving payroll direct deposit, wire transfer and W-2 scams.

These emails are primarily targeted to businesses, and are not limited to a particular industry or employer. However, the IRS has noticed an uptick in reports from tax preparers that they, too, are being targeted.

These emails generally impersonate a company employee, often an executive, and are sent to payroll or human resources personnel. The email asks the payroll or human resource staff to change his or her direct deposit for payroll purposes and provides a new bank account and routing number, but the account is actually controlled by the thief. This scam is usually discovered quickly, but not before the victim has lost one or two payroll deposits.

In another version, the emails impersonate a company executive and are sent to the company employee responsible for wire transfers. The email requests that a wire transfer be made to a specific account for company purposes, but the account is actually controlled by the thief. Companies that fall victim to this scam can lose tens of thousands of dollars.

All companies should be aware that these scams take many forms such as fake invoice payments, title escrow payments, wire transfers or other schemes that result in a quick payoff for the thief. Scams can often be easily identified through grammatical and spelling mistakes. Businesses should consider policy changes to guard against such losses.

These scams are often referred to as business email compromise (BEC) or business email spoofing (BES) scams. All businesses should be on guard against these and other dangerous scams and if discovered, should be forwarded to the Internet Crime Complaint Center (IC3), which is monitored by the Federal Bureau of Investigation. The public can file a complaint about email scams or other internet-related scams by going to www.ic3.gov. Tax professionals and others should also report tax-related phishing emails to phishing@irs.gov.

In yet another version, the email impersonates a company executive and requests a list of the company’s Forms W-2 covering all of its employees. The purpose of this scam is to allow thieves to file fraudulent tax returns for refunds quickly.

Because of the dangers to tax administration posed by the Form W-2 scam, the IRS set up a reporting process for employers. Employers who fall victim to the W-2 scam should report it at dataloss@irs.gov. There is a process employers can follow at Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers. Employers who receive the W-2 scam email but do not fall victim should forward the email to phishing@irs.gov.