Tax season brings a new wave of identity theft risks, with criminals ready to exploit your personal data to file fraudulent tax returns in your name. Imagine the shock of discovering that a criminal beat you to filing your taxes—potentially reaping your refund or creating serious headaches with the Internal Revenue Service (IRS). Unfortunately, this scenario is becoming increasingly common and serves as a stark reminder of why vigilance is essential.
A Growing Threat
In recent years, tax-related identity theft has grown more sophisticated. The Federal Trade Commission (FTC) reported that individuals lost over $10 billion to fraud in 2023—a 14% increase from the previous year—with over 2.6 million consumers falling victim. Impostor scams, including fraudsters pretending to be IRS officials, employ various tactics to steal sensitive personal and financial information.1
Recent data breaches, such as the massive leak at National Public Data, have exacerbated this issue by exposing millions of taxpayer identification numbers, giving scammers more opportunities to file fake returns early and claim refunds before legitimate taxpayers can file.
We provided this update for informational purposes only and to remind everyone that it’s not a replacement for real-life advice. If you are concerned that your tax filing has been compromised or fear that it could be in the future, we encourage you to consult with your tax, legal, or accounting professionals about specific steps you can take to manage your situation proactively.
Filing Early Could Be A Good Idea
In an example reported by the IRS, a common tactic involves fraudsters exploiting stolen Social Security numbers to file fraudulent tax returns and claim refunds before the legitimate taxpayer can file. This type of tax identity theft can create serious complications for taxpayers, including delays in receiving their rightful refunds and triggering a complex process with the IRS to correct the fraudulent return.
Criminals often seek to maximize their ill-gotten gains by claiming false credits or deductions, which can make the scheme appear more legitimate. The IRS encourages taxpayers to file their tax returns as early as possible to combat this type of fraud. By submitting your return promptly, the IRS says you create a smaller window for fraudsters to act. 2
The IRS has enhanced its security protocols and fraud detection systems to help identify suspicious activities. For example, the agency employs filters to detect anomalies and has programs to help victims of tax-related identity theft restore their accounts and receive legitimate refunds. Still, early filing can be a critical step for taxpayers to protect themselves.3
Other Common Tactics Used by Fraudsters
Tax scams often involve criminals impersonating IRS officials and using intimidation, misinformation, and digital tricks to extract money or data. Be alert to these tactics:
- False Promises of Refunds—Unsolicited messages or calls claiming you qualify for a refund or tax credit can be a ploy to steal your data.
- Aggressive Threats—Fraudsters may use threats of arrest, deportation, or other legal consequences to pressure victims into compliance.
- Suspicious Links—Be wary of emails containing questionable links that redirect to fraudulent websites designed to imitate the official IRS site.
- Gift Card Demands—Some scammers may instruct victims to make payments using gift cards, a common tactic to avoid traceable transactions. This is a clear red flag, as legitimate agencies, including the IRS, do not accept gift card payments.
- Phishing Emails and Texts—Phishing attacks often appear to come from trusted sources, including financial institutions or the IRS itself, and may request sensitive personal information such as your Social Security number or banking details. The IRS has warned taxpayers to be vigilant about phishing schemes, with scams often increasing during tax season or around economic relief packages.
Dirty Dozen Tax Scams for 2024
Compiled annually, the Dirty Dozen lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Here is their list from 2024.2