Income Tax Refund Fraud: What Everyone Needs to Know

Income Tax Refund Fraud: What Everyone Needs to Know

It’s time to do taxes and fraud abounds.   Income tax refund fraud is at an all-time high and growing fast.  And, even savvy people are getting caught up in income tax refund fraud.  Last year the Wall Street Journal highlighted a retired federal cybersecurity expert and consultant, Robert Jack, who found that when he filed his taxes he was told they were already filed and a refund check was sent to that address.  Being a security expert, Mr. Jack had shunned online tax preparation programs that store data.  He researched the security features of different software programs and chose a package – not a download version – product.  Upon arrival, he checked the package for signs of tampering before loading it into his secure home computer.  It still happened to him!

The IRS states that in 2010 there were 400,000 suspected tax identity theft incidents that grew to almost two million in 2013 and the number is growing rapidly.

What do you do to protect yourself? 

 File early!  The earlier you file, the less time there is for someone else to file a fraudulent return in your name. As of now, there is no way to find out if someone has already filed a tax return using your Social Security number until you send in your own.

Ask for an IRS PIN number. The IRS issues victims of tax identity theft a six-digit Identity Protection PIN for use in filing returns once cases have been resolved. Returns can’t be filed without the number, and the taxpayer receives a new one every year.  But you don’t have to be a victim to obtain such a PIN. All taxpayers can get a PIN.  The form is IRS 14039 and can be obtained by clicking:  Victims of Income Tax Refund Fraud check Box 1 and non-victims check Box 2.  For security reasons the form must be mailed to the IRS and the IRS will send the PIN number back by mail.

If You Become a Victim:

Act quickly and don’t expect speedy resolution. The IRS has a list of steps for victims to take at before calling the agency. They include filing a police report, an affidavit with the IRS and a complaint with the Federal Trade Commission; contacting the three major credit-reporting companies to place a 90-day fraud alert on your credit records; and closing any fraudulent accounts opened in your name.


Victims may want to impose a credit freeze with the credit-reporting firms, which can prevent extensions of credit using their identity.

The IRS says they should file their tax returns on paper.  It can take three to six months or more to resolve each case.  The IRS says that the legitimate tax refunds aren’t paid until a case is closed.  Take steps now to avoid this happening to you or a loved-one.


Be vigilant when using your computer.  Delete “cookies” every day!!  Use strong passwords – that include letters, numbers and characters and change them frequently. Do not store your passwords on your computer.  Keep them in a “Rolodex” type file and/or use a password management system such as “Lastpass.”