Early-Year Tax Fraud Is Increasing. This Particular Scheme Primarily Targets Small Businesses.

February is here. Tax filing activity is picking up. Accountants are stretched thinner. Bookkeepers are gathering paperwork. Minds are already on W-2s, 1099s, and looming due dates.

What rarely gets scheduled is the first real problem of tax season. And it usually has nothing to do with paperwork. It’s fraud.

There’s a specific scheme that appears well before April because it’s simple, convincing, and designed to exploit small businesses. Chances are, it may already be sitting unread in someone’s email.

The W 2 Scam: What Actually Happens

The playbook is simple:

An employee inside your business (usually payroll, HR, or finance) receives an email that appears to come from the owner, CEO, or another senior executive.

The message is brief and pressing:

“Hi, can you send me copies of all employee W 2s? I need them for a quick review with our accountant. Please send ASAP. I’m swamped right now.”

Nothing about it feels strange. The wording matches how that executive usually sounds. The timing makes sense. Tax season is hectic, and urgent requests aren’t unusual.

So, the employee complies.

What they don’t realize is that the message didn’t come from leadership at all. It was sent by an attacker using a spoofed email address or a nearly identical domain name.

At that point, the damage is done.

The attacker now has access to:

• Full legal names
• Social Security numbers
• Home addresses
• Compensation details

That’s enough information to steal identities, file fraudulent tax returns, and create months or even years of cleanup for both the business and its employees.

And it all happened with one convincing email.

How The Scam Plays Out

This is usually how it unfolds:

An employee submits their tax return, only to have it rejected with a message like: “A return has already been filed for this Social Security number.”

Someone else has already filed using their information and claimed the refund.

Now your employee is stuck dealing with the IRS, monitoring their credit, managing identity theft protection, and completing months of paperwork, all because of a document they had no reason to think was risky.

Scale that risk across your entire payroll. Imagine explaining to your team that their sensitive information was exposed because someone fell for a fraudulent email.

This isn’t just a cybersecurity issue. It’s a breach of trust, a major HR headache, a potential legal exposure, and a serious hit to your company’s reputation.

Why This Scam Is So Effective

This isn’t a silly “Nigerian prince” email. At first glance, it appears completely normal.

Here’s why it succeeds:

Perfect timing. W-2s are expected in February, so it seems reasonable that someone would request them now.

Plausible request. The email does not ask for a wire transfer or gift cards. It asks for something employees actually share during tax season.

Urgency feels natural. A note like “I’m buried in work today, can you send this quickly?” does not raise suspicion in a busy office.

Sender appears authentic. Criminals do their homework. They know the CEO’s name and sometimes even your accountant’s. The email is designed to look legitimate.

Employees want to help. People especially want to respond to their boss quickly. The sense of urgency often outweighs the instinct to verify the request.

How To Safeguard Your Business (Before This Hits)

The good news: this scam can be stopped. Prevention relies more on clear policies + company culture than on fancy technology.

Create a strict rule: no W-2s or other sensitive payroll documents are ever sent through email. No exceptions. If someone requests them by email, even if it seems to come from the CEO, the answer is always no.

Always verify sensitive requests through a second method. Call, meet in person, or use a secure chat. Use contact information you already have, not what appears in the message. Taking 30 seconds now can save months of cleanup later.

Hold a quick 10-minute tax-scam briefing right away. Don’t postpone it. Don’t wait until “later this month.” Walk your payroll and HR team through what’s coming and what to watch for. You can say something like, “Scam attempts are increasing. Here’s what a suspicious request looks like and how we respond.” A little preparation now goes a long way toward preventing major headaches later.

Secure payroll and HR systems with multi-factor authentication (MFA) on every account that handles employee data. Even if credentials are stolen, MFA stops attackers from accessing your systems.

Make verification part of your culture, not a burden. Employees who double-check requests from leadership should be recognized, not made to feel paranoid. When questioning is encouraged, scams have nowhere to thrive.

That's all. Follow these five steps. They are easy to implement this week and powerful enough to block the first wave of tax-season scams.

The Full Perspective

The W-2 scam is only the beginning.

Between now and April, be ready for a wave of tax-related attacks:

• Phony IRS notices claiming immediate payment is required
• Emails pretending to be tax software updates but carrying malware
• Messages that look like they came from "your accountant", with dangerous links
• Fake invoices designed to appear like legitimate tax or expense claims

Criminals take advantage of tax season because employees are busy, deadlines are tight, and financial requests feel routine.

Companies that get through this period without issues aren’t fortunate. They are proactive.

They have policies in place, their teams are trained, and their systems catch suspicious activity before it escalates into a serious problem.

Is Your Business Truly Prepared?

If your team already follows clear policies and can identify suspicious activity, you have a significant advantage. You’re better prepared than most small businesses to handle scams before they cause damage.

If you haven’t set policies yet, now is the time to act. Don’t wait until a scam has already hit your payroll or HR systems.

If your business fits this situation, schedule a quick 10-minute discovery call with us. During the call, we’ll go over:

• Payroll and HR account access, plus MFA
• W-2 handling and verification procedures
• Email safeguards to detect spoofing attempts
• The single policy adjustment most companies overlook

If this doesn’t apply to you, that’s great. But chances are you know another small business that could benefit. Share this article. It could prevent a costly problem.

Schedule your 10-minute discovery call here

Because tax season is hectic enough, you don’t need identity theft making it even harder.