Hunting season just began—the season in which cybercriminals are hunting for W-2 information from your company. They do this by sending emails spoofing high-level executives, such as the company President or CEO, to lower level clerical personnel requesting that W-2s for employees be provided by return email. The email is coming from—and then returned to—the criminal, not the executive, along with the W-2s. The company now has a serious data breach on its hands. Worse, your company's employees' information has been exposed and they now have this problem to worry about.
Law enforcement officers and cyber forensics professionals are reporting a drastic increase in this scam now, because it is tax season and these scammers are using this for tax related fraud. This week alone I have had new cases come in that involve this scam. If you have not been targeted yet, it is likely that you will be very soon.
On February 2, 2017, the IRS issued a warning about this scam: Dangerous W-2 Phishing Scam Evolving; Targeting Schools, Restaurants, Hospitals, Tribal Groups and Others In this warning, the IRS states the following:
The Internal Revenue Service, state tax agencies and the tax industry issued an urgent alert today to all employers that the Form W-2 email phishing scam has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits.
In a related development, the W-2 scammers are coupling their efforts to steal employee W-2 information with an older scheme on wire transfers that is victimizing some organizations twice.
“This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,’’ said IRS Commissioner John Koskinen.
When employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft. The IRS, state tax agencies and the tax industry, working together as the Security Summit, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams like this. As the Summit partners make progress, cybercriminals need more data to mimic real tax returns.
Here’s how the scam works: 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. This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).
The Security Summit partners urge all employers to be vigilant. The W-2 scam, which first appeared last year, is circulating earlier in the tax season and to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare and shipping and freight. Those businesses that received the scam email last year also are reportedly receiving it again this year.