TMCnet Feature
May 20, 2021

Leverage The Right Tools to Mitigate Tax Fraud in 2021



No business owner wants to get caught doing something fraudulent. Tax fraud comes in many forms and if you aren’t careful taxes can get you and your business in big trouble. Sadly, employers don’t leverage the tools available to them to help them mitigate tax fraud from the moment they hire an individual. They assume the resume and references are good but don’t realize that just because someone looks good on paper doesn’t mean they are trustworthy.



If you do enough of the right checks before hiring, you can limit your risk of hiring someone who is a liability. Not only do you not want to be accused of tax fraud yourself, you don’t want a staff member to be accused either and have police coming and arresting them during business hours. This can reduce customer trust in your business which takes a while to recover from. Additionally, the time and effort to hire new employees will be reduced if you do these checks first.

Perform Background Checks

While it may seem unnecessary depending on your industry, background checks are a useful tool to help mitigate issues like tax fraud in 2021. Many people expect a background check for job opportunities. If someone has a history of financial crimes, they are a greater risk, and you’ll need to proceed with caution if you choose to hire them. Unfortunately, some regulations don’t allow people with a particular criminal history to do certain jobs. Be aware of these regulations and how they impact your business. Additionally, background checks can help you identify people with volatile history such as domestic violence or assault. You’ll want to be sure you are providing a safe workplace for everyone in your company and that you keep your company assets safe.

Run a Credit Report

Want to find out how people spend their money? Pull a credit report. This is especially important for staff members who will have access to company or client finances. A credit report helps you spot people who are irresponsible with their income. While there are extenuating circumstances such as a recent divorce or death in the family that can impact a credit report, for the most part, you can tell if that’s the case by looking at the details.

A credit report shows you if a person is constantly living above their means. This could put them at risk for cutting corners or doing things in their job working for you that could get you into hot water. Tax fraud is a big issue, and you need to ensure your employees understand the importance of doing things the right way every time.

File Your Payroll Taxes

You can leverage many different tools to help you file your payroll taxes on time throughout the year. It’s important to have people working for you who will ensure this gets done on time each year. Businesses are at risk of tax fraud when they avoid this important paperwork and payments. It’s part of the reason why you need to hire reliable staff or outsource to a good company to get it done right each time.

Check Their Taxes

While you may not be able to see everything, you do need a way to ensure all your staff is filing their taxes on time. It’s always due at the same time each year, so there is no real reason to avoid doing it on time. You can check if an employee has filed previous years taxes on time and if they have a habit of not filing. While a one-off could be excused, if there is a constant pattern of late-filing, this is a big red flag that can put you at risk of tax fraud.

Not filing taxes is a good indicator of how good someone is with deadlines as well. If they can’t meet a deadline that’s exactly the same each year, how can you trust them to meet other work-related deadlines?

While it may seem excessive, background checks, tax checks, and running credit reports tells you a lot about a potential employee. You need to be sure you can trust people with the financial parts of your business and day-to-day deadlines. You must have staff who can be trusted with confidential client information and hiring staff who pass all these checks is your best way to mitigate tax fraud and other potential issues.



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