Tax Refund Identity Theft
The FTC received 1.4 million identity theft reports in 2024.
Quick Answer
Tax refund identity theft occurs when a scammer uses your Social Security number to file a fraudulent tax return and steal your refund, a crime that led to over 1 million identity theft reports to the FTC in 2023.
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How It Works
1
A criminal steals your personal information, such as your full name and Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN), often through data breaches, phishing emails, or by stealing mail. In 2024, there were 970 data breaches exposing the kind of personal information needed for tax fraud.
2
Using the stolen information, the thief files a fraudulent tax return in your name before you have a chance to file. They fabricate income and withholding information to generate a large refund, which they direct to a bank account or prepaid debit card they control.
3
When you attempt to file your legitimate tax return, the IRS rejects it because a return has already been filed using your SSN. You then receive a notification from the IRS about a duplicate filing or other tax-related issue you don't recognize, which is often the first sign you are a victim.
4
The victim is left with the complex and lengthy process of proving their identity to the IRS to resolve the fraud and receive their rightful refund. As of late 2024, the average processing time for the IRS to resolve these cases was 676 days, or nearly two years.
Red Flags
- You receive a letter or notice from the IRS about a tax return you did not file.
- Your electronically filed tax return is rejected because a return with your Social Security number has already been filed.
- You receive tax documents like a W-2 or 1099 from an employer you have never worked for.
- The IRS sends you a notification that an online account has been created in your name without your consent.
- You receive a tax refund you were not expecting, followed by a scammer posing as the IRS demanding you return the money, often via gift cards.
- Unsolicited calls, emails, or texts claiming to be from the IRS threaten arrest or demand immediate payment. The IRS typically initiates contact through postal mail.
What to Do If Targeted
- If your e-filed return is rejected, print and mail your tax return along with IRS Form 14039, the Identity Theft Affidavit.
- Respond immediately to any notice you receive from the IRS by calling the number provided in the letter.
- File a complaint with the Federal Trade Commission at identitytheft.gov. This creates a personalized recovery plan and an official Identity Theft Report.
- Place a fraud alert on your credit reports with one of the three major credit bureaus (Equifax, Experian, TransUnion). That bureau will notify the other two.
- Consider voluntarily opting into the IRS's Identity Protection (IP) PIN program. This is a six-digit number that adds an extra layer of security when you file.
- Continue to pay your taxes and file your tax return on time, even if you must do so by paper, to avoid potential issues for late filing.
How to Report It
- FTC — Report identity theft to the Federal Trade Commission and get a recovery plan.
- IRS — File IRS Form 14039, Identity Theft Affidavit, and follow the IRS's guidance for victims.
- FBI IC3 — Report the internet crime to the FBI's Internet Crime Complaint Center (IC3).
- FCC — File a complaint about phone scams, robocalls, or unwanted calls with the Federal Communications Commission.
- AARP Fraud Helpline — Call 877-908-3360 for free support from trained fraud specialists. Available to anyone, not just AARP members.
- FTC — File a fraud report with the Federal Trade Commission.
Key Statistics
- Consumers reported losing more than $10 billion to fraud in 2023, a 14% increase over 2022. — FTC 2024
- The average time for the IRS to resolve an identity theft case was 676 days (over 22 months) at the end of fiscal year 2024. — Taxpayer Advocate Service 2024
- In 2023, the FTC received over 1 million reports of identity theft. — FTC 2024
- A 2025 study of BBB data found that while only 12.9% of tax scam reports involved a financial loss, the average loss per victim was $32,080. — The Kaplan Group 2025
- The FBI's Internet Crime Complaint Center (IC3) received over 1,000 complaints about tax return identity theft in the past year, a 26% increase from the prior year. — FBI IC3 2025
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Frequently Asked Questions
The primary consequence is a significant delay in receiving your legitimate tax refund, which can take nearly two years to resolve. Victims must spend considerable time and effort proving their identity to the IRS. In some cases, thieves use a victim's identity to gain employment, which can lead to the victim owing taxes on income they never earned.
The most common way victims find out is when they try to e-file their tax return and it is rejected because one has already been filed under their Social Security number. Other signs include receiving IRS notices about a return you didn't file, getting tax documents from an unknown employer, or being notified that an online IRS account was created without your permission.
Yes, you can still get your refund, but the process is lengthy. You must file a paper return, submit an IRS Form 14039 Identity Theft Affidavit, and work with the IRS to verify your identity. According to the Taxpayer Advocate Service, the average resolution time for these cases reached 676 days by the end of fiscal year 2024.
File your taxes as early as possible in the tax season to get your legitimate return in before a scammer can. You can also voluntarily obtain an Identity Protection (IP) PIN from the IRS, which is a six-digit code required to file. Also, use strong, unique passwords and two-factor authentication for online tax preparation software.
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