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The Latest State and Local Payroll Compliance News From the American Payroll Association Owarning n January 25, the IRS issued a news release renewing the to payroll professionals of a phishing scheme designed to trick them into giving out payroll data [IR-2017-10, 1-25-17]. The scheme involves fraudulent email messages that appear to be from a company executive requesting personal information on employees. The IRS and states alerted employers to be on the lookout for the scam last year (see PAYSTATE UPDATE, Issue No. 7, Vol. 18). Several states have also issued additional warnings and guidance regarding this and other scams payroll professionals need to be aware of, including Connecticut, Idaho, Michigan, Minnesota, New York, Ohio, Pennsylvania, and Rhode Island. The IRS provides the following details that may be contained in the emails: • Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review. • Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary). • I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap. Connecticut The Department of Revenue Services (DRS) Commissioner Kevin Sullivan said, “No matter how official an email requesting a W-2 or Social Security numbers (SSNs) may look, do not respond without verifying it is legitimate. Don’t get scammed.” Payroll professionals are advised to double-check any executive level or unusual requests for lists of Forms W-2 or SSNs. Employers can call the DRS at 800-382- 9463 to report an email scam [DRS, Media Release, 1-27-17]. Idaho The State Tax Commission (STC) advises tax professionals to keep information secure. Employers should ensure that emails being sent or received that contain employee data are encrypted and secure. Paper documents, computer disks, flash drives, and other media should be kept in a secure location with restricted access to authorized users only. Access to employee information should be terminated for anyone who is no longer employed by the business. Employers are also advised to protect facilities from unauthorized access [STC, Tax Update, 1-17]. Michigan The Department of Treasury (DOT) is warning tax professionals to be alert for a two-part email scheme. In the scheme, a tax professional initially receives an email from a potential client asking for services to file taxes. If the professional responds, the cybercriminal sends a second email with an embedded web address or a PDF attachment with a web address allegedly linking to the taxpayer’s personal information. The cybercriminal is actually collecting the tax professional’s email address, password, and possibly other information. To date, no Michigan-based tax professionals have been victimized through this scheme. While this scam is not directed at payroll professionals, it is important for employers to be aware of potential threats [DOT, Press Release, 1-27-17]. Minnesota The Department of Revenue (DOR) warned payroll and human resources professionals about the W-2 scam by forwarding the IRS press release to employers. Though the IRS, states, and the tax industry have made progress in the fight against tax-related identity theft, cybercriminals are using more sophisticated tactics to try to steal even more data that will allow them to impersonate taxpayers [DOR, Emails, 1-25-17 and 2-1-17]. New York The Department of Taxation and Finance (DTF) posted two recent updates to its Tax Scams and Consumer Alerts web page regarding tax scams targeting tax professionals. In January, the DTF warned of the two-step email scam mentioned previously. In December, the DTF warned of a phishing email with the subject line “Mails on Hold!.” In this scam, the emails appear to be from the IRS, including references to IRS personnel – but they are not. Do not click on any links or open any email attachments contained in these emails. The DTF also has a web page to report fraud, scams, and identity theft at: https://www.tax.ny.gov/help/contact/ fraud-scams-idtheft.htm [DTF, Tax Scams and Consumer Alerts, 1-17 and 12-16]. Ohio The Department of Taxation (DOT) also warned payroll and human resources professionals about the W-2 scam by forwarding the IRS press release to employers. The DOT shared the news to “maximize awareness.” Employers are encouraged to visit the IRS website at www.irs.gov for more information [DOT, Email, 1-27-17]. Pennsylvania Revenue Secretary Eileen McNulty said that, “Over the last few years, we’ve seen a surge in the number of reported incidents of refund fraud and identity theft. Given the ongoing threat, tax professionals are urged to be vigilant when handling taxpayers’ personal information.” The Department of Revenue (DOR) joined the IRS and other states February 6, 2017 • Volume 19 • Issue # 3 States Issue Warnings on Email Scams, Some Involving W-2s