Tax Season Scams Are Starting Early. Here's the One That Hits Small Businesses First.

It's February, and tax season is in full swing. Your accountant is busier than ever, while your bookkeeper is scrambling to gather documents. Everyone's focused on W-2s, 1099s, and looming deadlines.

But here's a hidden threat that most fail to mark on their calendars: the earliest and most frustrating tax-season headache often isn't a form—it's a phishing scam.

This particular scam surfaces well before April because it's cleverly designed to be believable and targets small businesses right in their inboxes.

Unpacking the W-2 Scam: What You Need to Know

Here's how it typically unfolds:

An employee—usually someone in payroll or HR—receives what appears to be an urgent email from the CEO, owner, or a top executive.

The message is brief but pressing:

"I need copies of all employee W-2s immediately for a meeting with the accountant. Can you send them ASAP? I'm swamped today."

At first glance, it seems legitimate. The tone, the urgency, and the timing all feel natural during tax season.

So, the employee complies and sends over the W-2s.

But in reality, that email isn't from the CEO. It comes from a cybercriminal using a spoofed email address or a fake domain.

Now, the attacker has access to every employee's:
• Full legal name
• Social Security number
• Home address
• Salary details

All the sensitive information needed to commit identity theft and file fraudulent tax returns before your employees even file their own.

What Happens After the Breach?

Usually, the first sign comes when an employee tries to file their tax return and it gets rejected with "Return already filed for this Social Security number."

Someone else has already submitted a fraudulent return and claimed their refund.

Your employee then faces the daunting task of dealing with the IRS, monitoring their credit, enrolling in identity theft protection, and handling months of paperwork—all because of a single email.

Imagine this multiplied across your entire payroll. Now consider having to explain to your team why their personal data was compromised due to a scam.

This isn't just a security breach—it's a trust crisis, an HR disaster, a potential legal liability, and a serious hit to your company's reputation.

Why This Scam Is So Effective

This isn't a crude phishing attempt—it's sophisticated and convincing.

Here's why it succeeds:

• Perfect timing: W-2 requests in February don't raise suspicion.
• Reasonable asks: Unlike outrageous money transfer demands, requesting W-2s seems normal.
• Credible urgency: "I'm slammed today, can you send these fast?" fits a busy office vibe.
• Believable sender: Attackers research names and mimic real email addresses and domains.
• Employee goodwill: Team members want to help their boss and may skip verification steps in a rush.

Steps to Safeguard Your Business Before the Scam Strikes

The good news? This attack is entirely preventable with simple policies and a vigilant culture more than just technology.

Implement a strict "no W-2s via email" policy. No exceptions. Never email sensitive payroll documents outside your secure systems. If someone requests them by email—even appearing to be the CEO—the answer is a firm "no."

Verify all sensitive requests through a second channel. Whether it's a phone call, an in-person check, or a chat, confirm using a known contact number or method—not by replying to the email.

Hold a quick tax-scam awareness meeting now. Don't wait until the heat of the season. Educate your payroll and HR teams on what to watch for and how to respond.

Secure your payroll and HR systems with multi-factor authentication (MFA). This extra step protects data even if credentials are compromised.

Promote a culture of verification, not suspicion. Employees who confirm unusual requests should be recognized, not criticized. Encouraging caution closes loopholes for scammers.

Just these five straightforward rules can be implemented quickly and will significantly reduce your exposure.

Looking Beyond the W-2 Scam

The W-2 scam is just the beginning.

Expect an influx of tax-related cyber threats through April, including:

• Phony IRS notices demanding urgent payments
• Fake tax software update emails loaded with malware
• Spoofed messages from accountants containing dangerous links
• Fraudulent invoices disguised as legitimate tax expenses

Tax season is a favorite target for criminals because everyone's stressed and rushing. Financial requests don't appear out of the ordinary.

Companies that navigate tax season without incident aren't lucky—they're prepared with policies, training, and systems that flag suspicious activity before it's too late.

Is Your Business Ready to Face the Threat?

If your team already has clear policies and knows what red flags to watch for, you're ahead of the curve compared to many small businesses.

If not, the best time to act is now—before the scammers strike.

Consider scheduling a quick 15-minute Tax Season Security Check.

During this session, we will review:
• Payroll and HR system access controls, including MFA
• Verification protocols for W-2 requests
• Email safeguards that detect spoofing attempts
• A key policy tweak that many companies overlook

Feeling confident about your defenses? Fantastic. If not, or if you know another business owner who might benefit, share this guide. It could save them from a costly crisis.

Because tax time is stressful enough without heading into identity theft.