Small business identity theft is a big business for identity thieves. Just like individuals, businesses may have their identities stolen and their sensitive information used to open credit card accounts or file fraudulent tax returns seeking bogus refunds. To mark “National Tax Security Awareness Week,” the Delaware Division of Revenue, along with the IRS and the nation’s tax industry have joined together to warn small businesses to be on-guard against a growing wave of identity theft against businesses and employers.

In the past year, the Internal Revenue Service noted a sharp increase in the number of fraudulent Forms 1120, 1120S and 1041 as well as Schedules K-1. The fraudulent filings include forms filed relating to partnerships, estates and trusts. Identity thieves are displaying a sophisticated knowledge of the tax code and industry filing practices as they attempt to obtain valuable data to enable them to file fraudulent returns.

Identity thieves have long made use of stolen Employer Identification Numbers (EINs) to create fake Forms W-2 that they file with fraudulent individual tax returns seeking refunds. Fraudsters also used EINs to open new lines of credit or obtain credit cards. Now, they are using company names and EINs to file fraudulent returns for the businesses themselves.

As with fraudulent individual returns, there are certain signs that may indicate identity theft. Those filing returns for corporations, partnerships, estates or trusts should be alert to potential identity theft and contact the IRS if they experience any of these issues:

• Extension to file requests are rejected because a return with the Employer Identification Number or Social Security number is already on file;
• An e-filed return is rejected because a duplicate EIN/SSN is already on file with the IRS;
• An unexpected receipt of a tax transcript or IRS notice that doesn’t correspond to anything submitted by the filer;
• Failure to receive expected and routine correspondence from the IRS because the thief has changed the taxpayer’s address.

New Procedures to Protect Businesses in 2018

The Division of Revenue, the IRS, and software providers share certain data points from returns, including business returns, which help identify a suspicious filing. Delaware and the IRS are asking that businesses and tax practitioners provide additional information that will help verify the legitimacy of the tax returns they file.

For 2018, the “know your customer” procedures that are being put in place include the following questions:

• Authorized signer – Confirm the name and SSN of the company executive authorized to sign the corporate tax return;
• Payment history – were estimated tax payments made? If yes, when were they made, how were they made, and how much was paid?
• Parent company information – is there a parent company? If yes, what is the name of the parent company?
• Deduction information – Provide additional information based on deductions claimed;
• Filing history – has the business filed Form(s) 940, 941 or other business-related tax forms?

Individuals operating as sole proprietorships who file Schedule C with Form 1040 and partnerships that file Schedule K-1 with Form 1065 also will be asked to provide additional information items, such as a driver’s license number. Providing this information will help Delaware and the IRS identify suspicious business-related returns.

For small businesses looking for a place to start on security, the National Institute of Standards and Technology (NIST) has produced Small Business Information Security: The Fundamentals. NIST is the branch of the U.S. Commerce Department that sets information security frameworks followed by federal agencies. The United States Computer Emergency Readiness Team (US-CERT) has created Resources for Small and Midsize Businesses.

Take the steps recommended by cyber experts to protect your business, and visit the Identity Protection: Prevention, Detection and Victim Assistance for more information about business-related identity theft.

David Gregor has been appointed the new Director of Revenue for the State of Delaware, effective Monday, January 9, 2017.  Mr. Gregor has been with the Department of Finance for more than 29 years, most recently serving as the Deputy Secretary of Finance – a position he’s held since August of 2010. He has been responsible for policy development, financial analysis, as well as public affairs and communications for the department; including, but not limited to, tax, debt and infrastructure investment policies, and the management of the annual revenue stream in excess of $2.8 billion.

Mr. Gregor’s significant contributions the Department of Finance include providing analytic and strategic support to the Secretary – including public review of the State’s revenue system covering portfolio risks and economic competitiveness, producing recommendations that formed the basis for legislation that contained the most significant corporate income tax amendments in decades. He was responsible for modernizing the State’s primary economic development tax credit program in order to provide larger and better targeted incentives – at zero cost to the State. He has led the Division of Revenue through a thorough review of personal income tax processing methods, and ultimately reduced refund processing times by 30%. He also facilitated the efforts of tax administrators, industry executives and elected officials in the amendment of gross receipts tax, which led to the reopening of a shuttered refinery and the restoration of 800 jobs.

Since August 2013, Mr. Gregor has simultaneously served as State Escheator, managing all aspects of Unclaimed Property – the state’s third largest revenue source, with a staff of more than 20 employees and on-site contractors responsible for the administration of a $500 million revenue source. He led the team in a fourfold increase in claims paid, and the annual return of $100 million in assets to the property owners. He championed the implementation of a state of the art unclaimed property system enhancing internal controls, processing efficiencies, operational reporting and web-based functionality for owners and holders. This has resulted in a fivefold increase in claims submissions, and allowed for online filing of annual holder reports.

He has led or participated in the preparation of the State’s General Fund revenue forecast, and functioned as a tax policy analyst. Mr. Gregor previously managed the Bureau of Business Tax Systems, overseeing a staff of 20 responsible for processing and reconciling business license, gross receipts and withholding tax payments. He established performance measures for the new withholding computer system and identified causes of processing delays and managed the elimination of a multi-year backlog resulting in over $1 million in assessments He has also served as Executive Assistance to the Secretary of Finance with responsibility for a $35 million budget covering three operating divisions and department-wide information technology capital plan, and contributed to the development of statewide financial policies, including legged payroll, collection and write-off practices, and proper use of surplus state funds.

“David has a deep commitment to delivering efficient and effective services to Delaware’s taxpayers,” said Finance Secretary Tom Cook. “With his experience in finance, and his outstanding management skills, I am confident he can guide the Division of Revenue to new and even higher standards.”

Statewide, DE — Delaware Division of Revenue Director Patrick Carter has announced the posting another list of top 100 delinquent individual and business taxpayers on the state’s Delinquent Taxpayers website.

The website posts the names of people and businesses who owe unpaid taxes to the state for public view. By legislative order, larger balances are targeted first for publication. Each quarter the next 100 consecutive business tax and 100 consecutive personal unresolved tax balances over $1,000 are posted to the site. Delinquent taxpayers can avoid appearing on the list by paying their balance in full or making payment arrangements.

“Posting these violators online leads to public scrutiny, and puts pressure on those in violation,” Carter says. “These lists help Delaware recoup outstanding balances while incurring minimal expense for taxpayers.”

Since its inception in February 2007, the Delinquent Taxpayers webpage has collected in excess of $11.9 million in back taxes from those whose names were published, or who were advised that they qualified to have their names published online.

In order to meet the criteria for having your name posted to the Delaware Delinquent Taxpayers site, individuals and businesses must have already received a judgment for unpaid taxes. They are then notified by mail that their names may be posted online, and given 60 days to respond. Delaware is one of over 20 states and the District of Columbia to publish delinquent taxpayers’ names online.

The names of those who enter into a payment agreement with the Division of Revenue or pay their balance in full are either not published or will be removed from the Delinquent Taxpayers list, depending on when the agreement takes place. Taxpayers who have filed for bankruptcy protection or who have incurred a liability that is being appealed are excluded from the published list until their case has been resolved.

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Leslie A. Poland
Public Information Officer
Delaware Department of Finance
(302) 577-8522
leslie.poland@delaware.gov

Division of Revenue Director Patrick T. Carter has announced that Delaware tax season will begin Tuesday, January 19, 2016. Citizens are encouraged to file their 2015 State of Delaware Personal Income Taxes online at www.delaware.gov. This year’s filing deadline is Monday, May 2, 2016. Online filing offers many advantages, and Delaware urges taxpayers to electronically file their returns. Refunds from electronically filed returns are issued on average within 2 weeks, while refunds from paper-filed returns average over seven weeks. Last year, the average time to issue a refund for all tax filing methods combined was just over 20 days.

Delaware offers the following electronic filing options:

1. Those who don’t need tax preparation software can file for free on the Delaware Division of Revenue website. This online system is extremely user-friendly and available 24/7. The system also allows taxpayers to file their returns and then schedule any payment due closer to the May 2nd deadline. Taxpayers may pay their State of Delaware taxes on this system using a credit card or by debiting their bank account.
2. Those who prefer tax-preparation software can electronically file their federal and state income tax returns for a fee, although these products also offer free-filing options for Delaware taxpayers who meet the following qualifications:

• Adjusted gross income is less than the software’s established means criteria; or
• Active-duty military with an adjusted gross income of $60,000 or less (including Reservists and National Guard); or
• Qualify for the Federal Earned Income Tax Credit (EITC)

For paper-filed returns, the State uses a modernized processing system that identifies tax filings based on the return type. Any taxpayer who files a 2015 tax return using a previous-year return, or who modifies the paper return in some way, will experience significant delays. Paper tax returns will be available at local libraries or for download at www.revenue.delaware.gov.

Because Delaware does not maintain reciprocity agreements with other states; it is important for anyone who is not a Delaware resident – but who has worked in Delaware – to understand that they must file a Delaware tax return. Delaware Residents who work out-of-state are required to file returns with Delaware in addition to the state where they worked.

By law, Delaware employees should receive their W-2 employment forms by January 31, 2016 for any job worked during the 2015 calendar year. Those who haven’t received a W-2 by January 31 should contact their employer.

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Leslie A. Poland
Public Information Officer
Delaware Department of Finance
Division of Revenue
(302) 577-8522
leslie.poland@delaware.gov

Free online tax filing available through state website

Statewide, DE – Division of Revenue Director Patrick T. Carter reminds taxpayers today that State of Delaware Personal Income Tax is due April 30, 2014.  Citizens can file their Delaware Income Taxes online for free at www.delaware.gov.

On average, Delaware’s online filing system allows taxpayers requesting a refund to receive their refund two weeks earlier than those filing paper returns. Currently, the average time to issue a refund for online tax filing is under 9 days, compared to paper tax filing which is over 21 days.

Online filing also allows taxpayers to file their taxes electronically and then schedule any payment due closer to the April 30^th deadline. Online filing is available 24/7. Taxpayers may pay their State of Delaware taxes using a credit card or by debiting their bank account.

Because Delaware does not maintain reciprocity agreements with other states, it is important for anyone who is not a Delaware resident – but worked in Delaware in 2013 – to understand that they must file a Delaware tax return. Likewise, Delaware Residents who work out-of-state are required to file returns with Delaware, in addition to the state where they worked.

If a taxpayer owes Delaware and doesn’t have the funds to make payment on April 30^th, it is still important to file the return and make future payment arrangements because there is a 5% monthly penalty if the return is not filed on time. Likewise, if a taxpayer doesn’t have all of their return completed they can file an extension using the Delaware extension form, DE1027, which will give them until October 15, 2014 to file the original tax return without the 5% non-filing penalty.

By law, Delaware employees should have received their W-2 employment forms by January 31^st for any job worked during the 2013 calendar year. Those who haven’t received a W-2 should contact their employer immediately.

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Contact:
Angela Moffett-Batty
Community Relations Coordinator
Delaware Division of Revenue
302-577-8522