The FBI has issued a warning about a surge in tax-related identity theft, with criminals stealing taxpayer identities to file fraudulent returns and claim refunds. While tax fraud is certainly nothing new, this alert comes after more than 1,000 complaints to the FBI’s Internet Crime Complaint Center (IC3) over the past year – a 26% increase from the prior year.
The scam typically works like this: thieves obtain your personally identifiable information (PII), such as your Social Security number, and use it to file a federal income tax return in your name. They then redirect the refund to a bank account, prepaid card, or physical address they control. And, sadly, with data breaches becoming the norm, our SSNs and other PII are widely available for sale on the dark web.
How to Prevent Tax Identity Theft
One of the most effective safeguards to preventing this scam is getting an Identity Protection Personal Identification Number (IP PIN) from the IRS. This is a six-digit code that acts as a second layer of security for your tax account. Once enrolled, only someone with your IP PIN can file a return under your Social Security number.
If you haven’t already, you can voluntarily enroll in the IP PIN program by creating an IRS.gov account and verifying your identity. The IRS automatically issues an IP PIN to confirmed victims of tax-related identity theft.
Other steps recommended by the IRS to protect yourself include:
- Secure your IRS Online Account with a strong, unique password (which you should be going for all of your important accounts, anyway).
- Protect sensitive data such as your Social Security number, dependent information, and financial logins.
- Monitor all tax- and credit-related accounts for signs of suspicious activity.
Read more: Think That File Converter Is Safe? The FBI Says Think Again
Warning Signs of Tax ID Theft
There are several red flags that may indicate your identity has been compromised, including:
- A rejected e-filed return because one has already been filed using your SSN.
- Tax forms, such as a W-2 or 1099, from employers you didn’t work for.
- IRS notices about unreported income or benefits you didn’t receive.
- Your Online Account shows returns or activity you didn’t initiate.
If you receive an IRS letter or notice, don't ignore it. Verify it’s legitimate, follow the instructions, and if directed, use the IRS Identity and Tax Return Verification Service.
If you suspect you’re a victim of tax identity theft, act quickly:
- Report it to the IRS by following the instructions in any letter you receive, or by filing Form 14039 if instructed.
- File a report with the FBI’s IC3 at www.ic3.gov.
- Visit IdentityTheft.gov for additional federal resources and recovery steps.
- Continue filing your taxes and paying what you owe, even if you're dealing with an identity theft situation.
- Keep records of all communication with the IRS and other agencies.
Stay Vigilant
Tax identity theft isn’t just a massive headache – it can delay your refund, trigger audits, and complicate your future filings. And it’s not just you who could be affected. Criminals often target your children, dependents, and even a deceased spouse.
Read more: How Security Expert Troy Hunt Got Phished—and Why 2FA Didn’t Save Him
You can find the full IRS identity theft guide, including links to secure your account and get your IP PIN, at irs.gov/identity-theft-guide-for-individuals.
[Image credit: OpenAI's DALL·E]
