Posted by Income Taxes and Bookkeeping LLC

Tax Refund Fraud & Ways to Protect Yourself From Being a Victim

Tax Refund Fraud & Ways to Protect Yourself From Being a Victim

Tax refund fraud is a common scam used by crooks to steal money and identify the financial and personal information of U.S. taxpayers. Crooks can file a false income tax return and invest millions of dollars in fraudulent refunds with this information. The Internal Revenue Service reported that in 2018 alone, identity thieves received $90-380 million in tax refund fraud! It is best to know about this type of scam to protect your identity and prevent tax refund theft.

What methods do crooks use to obtain personally identifiable information?

  • Phishing calls that present themselves as IRS

  • Text messages or phishing emails that appear to be from a trusted source (e.g., Internal Revenue Service (IRS), your bank)

  • Computer fraud: intrusion into tax declaration systems or database breach.

What are the signs of identity theft?

You may not know you've been a victim of identity theft until the IRS alerts you of a possible problem with your return.

  • A letter from the IRS asking you for a suspicious tax return that you have not filed.

  • A notice from the IRS that you are being charged additional fees or damages or that collection action was taken against you in a year in which you did not file a return of income.

  • A notice from the IRS that you received wages or other income from an employer for whom you did not work.

  • A notification from the IRS that your existing online account has been connected or disconnected with no action taken or a new online account created on your behalf.

  • An unsolicited tax transcript by mail.

  • Problems with the electronic filing of the tax return due to the duplicate of your social security number.

The IRS will never:

  • Establish contact by email, SMS, or social network to request personal or financial information or identity protection codes

  • Link to threats of persecution or arrest.

If you receive a call from an agent claiming to be from the IRS, ask for the caller's name, a callback number, and a badge number. Drop the call and call the IRS at 1-800-366-4484 to determine if the caller is an IRS employee and is contacting you for a legitimate reason.

Ways to protect yourself:

  • Avoid malware without ever downloading any software or pop-up apps.

  • Avoid phishing scams by searching for emails claiming to be a reliable source (e.g., bank, tax) with an urgent message such as "Update your account now!" and/or instructions for opening a link or attachment.

  • Examine your Social Security Administration records annually. Sign up for My Social Security 

  • Protect your SSN at all times. Only give it out if you are sure who you are giving it to.

  • Regularly check your credit report for fraudulent activity and make sure no one has opened new accounts on your behalf. 

  • Submit your tax return as early as possible during tax season.

  • Talk to your family about online safety when using computers and mobile devices.

  • Thorough research of a tax preparer before submitting personal information.

  • Use a secured and fast Internet connection if you are filing your tax return electronically or by mail directly from the post office.

Social Security Number (SSN)

If your Social Security number (SSN) is exposed and you know or suspect that you have been the victim of identity tax theft, the IRS recommends that you follow these steps:

  • Respond promptly to any IRS notification and call the number provided.

  • If your e-filed return is refused due to a replicate entry of your Social Security number or if the IRS requests it, complete IRS Form 14039 Identity Theft Affidavit. Use a fill-out form on, print and attach the return form, and mail it as directed.

  • Visit Identity to learn about the immediate steps you can take to protect yourself and your financial accounts, or talk to a tax expert to seek expert assistance.

Fraudulent Returns

If you believe a scammer has filed a fraudulent return on your behalf, you can obtain a copy of the return. Follow the instructions to request a copy of the fraudulent return.


If you receive an IRS CP87A notification and are told that one of your dependents has been claimed on another tax return or by yourself, it is best to find out why someone else has claimed your dependent.


Data Breach

Not all data breaches or hacks involve identity theft for tax purposes. It is important to know what personal information has been stolen. If you've been a victim of a data breach, contact the company to find out what they're doing to protect you and follow the steps for identity theft victims. Data breach victims should submit Form 14039, Identity Theft Report only if your Social Security number has been compromised and your return is rejected as a duplicate, or if the IRS asks you to submit the form.

Take action if you are a victim.

If you are the victim of tax refund fraud, notify the IRS and your bank immediately. Report any suspicious or unsolicited email claiming to have been sent by the IRS to



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