Every year, tax professionals are faced with what to do when presented with documents they think may not be legitimate, of particular concern, fraudulent W-2s. We encourage you to use ‘MyFTB Account’ to verify W-2 information such as California wage and withholding information. If you cannot find your client’s information on 'MyFTB Account,' then ask the client for a copy of their last paycheck stub or call the employer to verify the wage and withholding amounts.
However, if you still have concern, you may fax copies of suspicious W-2s to 916.843.6034. Include your contact information with your fax. Our goal is to confirm the validity of the W-2 within 24-48 hours. Referring a questionable W-2 to us, regardless of whether the return is transmitted, enables us to prevent the fraudulent refund from being issued.
The perpetrators of false W-2 filings do it in many ways, including: altering an existing W-2; making up W-2s by making up social security numbers; using another person's social security number, or outright identity theft. Typical red flags used by suspicious filers:
Tax Fraud Examples
- Deliberately preparing and submitting false W-2s.
- Deliberately claiming false refundable credits.
- Purposely claiming false business (Schedule C) income.
- Intentionally omitting income information to reduce/avoid tax or obtain refundable credits such as Earned Income Tax Credit.
- Using someone else's identity (forgery or identity theft).
Client Interview "Fraud Flags"
- New (unknown to you) client that appears nervous.
- Client appears to be following a script.
- Client accompanied by a friend that appears to be coaching your client.
- Excessive distance from taxpayer to preparer's address.
- Unknown (unable to verify) employer address, phone number.
- Identification seems to be altered.
- Client unfamiliar with type of work performed.
- Length of employment is under 12 months.
W-2 Fraud Indicators
- Unreasonable withholding compared to wages.
- Excessive wages (executive vs. line worker) for type of work.
- W-2 is not similar to the type of W-2 issued by that particular employer. Example: Hand typed or written for a larger corporation that uses a specific type of computer generated W-2.
- Missing identification number (SEIN/FEIN). All W-2s should have identification numbers.
- Dollar amounts (decimals) out of alignment, as well as the entity information.
- Information misspelled.
- Appearance of altered W-2 – white out or added figures. Example: W-2 for withholding has an amount, but the "print type" does not match for all the numbers. The changes are an addition of a digit to increase withholding amount or a white out digit to decrease wage amounts.