Daily Tax Update - February 3, 2017: IRS LB&I Division Releases Practice Unit for Basket Transactions

IRS LB&I Division Releases Practice Unit for Basket Transactions:  The IRS Large Business and International Division (LB&I) released a practice unit covering basket transactions described in Notices 2015-73 and 2015-74.  Practice units are internal documents used by IRS staff as job aids and training materials in compliance efforts.  Basket transactions are one of the 13 issue campaigns recently announced by LB&I.

IRS Warns of W-2 Phishing Scam:  The IRS has issued an alert warning of a Form W-2 phishing scam that has spread beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations, and nonprofits.  The IRS reports that there has been an upswing in reports of the scam in recent days.

In the scam, cybercriminals use various spoofing techniques to disguise an email to make it appear as if it is from an organization executive.  The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2.  The cybercriminals may then use the stolen Forms W-2 to file fraudulent tax returns or for identity theft.

The IRS urges all employers to share information with their payroll, finance, and human resources employees about the scam.  The IRS also recommends that employers consider creating an internal policy, if one is lacking, on the distribution of employee W-2 information and conducting wire transfers.

The alert includes steps that employers can take if they see, or fall victim to, the scam.  The alert states that when employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft.