September 11, 2020
Watch Out for Scams
We've all seen weird numbers pop up on our phones that end up being a telemarketer or scam call, but what most people don't realize is that there are similar scams and annoyances that target businesses too.
The most common and innocuous of these scams are Labor Law Poster providers. In most states, it is the law to display up-to-date labor law notifications in employee gathering spaces. But what many people don't realize, especially new business owners, is that those notices are provided FREE on state labor websites to download and print for display. Yet there are companies that get alerted when new businesses are registered and send out "notices" with official-looking seals and language "offering" laminated labor law posters for around $100.
What these cleverly disguised business propositions really offer is a service, that while not illegal, is definitely a sketchy scam meant to trick unwary new business owners into thinking they need to pay for what they can actually get for free. If you get one of these, send it to your accountant before taking action. They will let you know it's not required and direct you to where you can get them for free. Also, if the only person working at your business is you, then you don't even need to display the free notices in the first place.
Some of the more dangerous scams involve "phone farms" that spend all day and night contacting tax-paying entities claiming they are sending police or federal officers to your location because of unpaid tax debt, regardless of whether a debt actually exists. These scammers will ask you for your Social Security or EIN number to execute the payment.
Just remember, the IRS will NEVER call you. EVER.
They will send notices, letters, and levy threats. If those are ignored, they will simply show up at your home or office and demand your documents. If anyone calls you claiming to be a tax official or government agent, you should do the following:
- Request they identify themselves fully, including full name, contact information, government agency identification, and proper number to return calls to.
- Get off the phone with them and immediately contact your preferred tax professional and/or legal counsel to give them that information. You should never, EVER, speak to a government/tax official yourself because you can inadvertently give incorrect or even just too much information to that official. Consult your CPA first.
- Get your house in order: make sure your bookkeeping is fully up to date and reconciled, that you have documents backing up your entries and that the financials match the filed returns with the government agency in question.
- Listen to your CPA but remember to only provide the specific documentation the agency is requesting for the time period in question. Do not volunteer for further information.
If you are a Formations customer, you have a trusted partner to help you with this. If you get a weird notice or call you can contact your customer success manager and we will leap to your defense with clear instructions and speak to the necessary parties to clear up any valid issues. We will also advise when the contact you've received is illegitimate, and report them to the FTC (Federal Trade Commission) for investigation and prosecution.