ITS Office of Information Security

Identity theft refund fraud is a widespread fraudulent scheme where criminals use stolen identity information to file bogus tax refund claims. This form of identity theft has grown substantially over the past few years. 

While taxpayers may not be financially liable for fraudulent returns, the time and effort in responding to this common form of tax fraud can be considerable.  Additionally, experiencing this type of fraud often implies that your identity information has been collected by criminals.

One of the reasons that this form of fraud is so successful is that identity thieves have over the years gained access to large amounts of confidential and sensitive identity information, such as name, date of birth, and social security number.   While there is no perfect defense against this type of fraud, there are some steps that can certainly help.

1.  Get a Confidential E-File Personal Identification Number (PIN)

• For electronic filings, the IRS validates the identity of the taxpayer by asking for previous Adjusted Gross Income or an electronic filing PIN. While not a complete defense, establishing a E-File PIN can raise the bar for identity thieves who attempt to E-File a fraudulent return in your name. To establish an E-File PIN, visit the IRS website at http://www.irs.gov/Individuals/Electronic-Filing-PIN-Request

2. File Your Tax Return Early

• Submitting your tax return as soon as possible leaves less time for criminals to act

3. File Securely

• When filing your tax return, use a secure, private WiFi network, not public hotspots

4. Place a Credit Freeze

• Place a credit freeze on your credit reports.  A credit freeze keeps people from getting into your report.  While a freeze is in place, nobody can open a new credit account.  They're free to place & to lift.

5. Protect Your Social Security Number (SSN)

• Do not carry your social security card with you
• Only share your SSN when absolutely necessary

6. Watch for Phishing

• The IRS does not initiate contact via email, text, or social media to request personal information.  If someone claims to be from the IRS and contacts you via these channels, do not give them any of your information.

Source: irs.gov

Targets of identity theft could be you, your spouse, your children, or other dependents.  Here are some common warning signs that may indicate that you are a victim of identity theft refund fraud.  

1. You receive a letter from the IRS about a tax return you did not file

2. You are unable to e-file because a tax return with your social security number has already been processed

3. You receive a tax transcript in the mail that you did not request

4. Someone wants to "help" you with your online account

5. You receive unsolicited alerts about password resets or login verifications

Source: irs.gov

If you think you have become a victim of Identity Theft Refund Fraud, follow these steps:

1. Report it to the IRS

• Immediately file an IRS Identity Theft Affidavit (Form 14039)

2. Report it to the Federal Trade Commission

• File a report at IdentityTheft.gov

3. Place a Freeze on Your Credit

• If you have not done so already, now is the time to place a free credit freeze with the 3 major credit bureaus
  • Equifax
  • Experian
  • TransUnion

Source: irs.gov