Protect Your Tax Refund from Theft

Couple looking at paper and computer

Many people count on their tax refunds to help pay down debt, make a special purchase, or cover an unexpected expense. But, crooks can intercept federal income tax refunds with only a small amount of personal information: your name and Social Security number (SSN). Fraudsters use this data to file fake returns. The Internal Revenue Service (IRS) has termed this crime "stolen identity refund fraud (SIRF)" and encourages taxpayers to protect themselves before it's too late.

How SIRF Works

Thieves typically obtain the information they need for this scam by hacking computer systems and stealing confidential customer data. They may also impersonate IRS agents via email, text, or telephone. Crooks will falsely claim private information is needed to resolve a tax issue. Once they match your name to your nine-digit SSN, they can file your federal income tax return without your knowledge.

Taxpayers often learn of the fraud scheme when an e-file return is rejected, or the IRS sends a written notice alerting them that the agency didn't accept their federal income tax return. The reason – another return was already filed for the tax year using the same SSN resulting in a duplicate return.

SIRF Red Flags

Early warning signs of SIRF could appear in your physical mailbox before you've filed your return and might include written notices or confirmations of:

  • Tax transcripts you never requested
  • An IRS online account you never created
  • Changes to an existing IRS account
  • Modifications to prior-year tax filings you didn't initiate

If a crook uses your information to file a bogus return, it could delay receipt of your actual refund until the situation is resolved.

How to Prevent SIRF

Since your SSN is key to a successful scam, take steps to keep it out of the hands of criminals. Protect your private information by:

  • Storing your Social Security card in a locked fireproof cabinet or safe deposit box at your credit union instead of carrying it in your wallet
  • Never giving your complete SSN to anyone who requests it over the phone, email, or text
  • Deleting emails and text messages that encourage you to click on links and attachments since doing so could download malware that scans your device for your SSN or other private data
  • Ignoring unsolicited phone calls from the IRS or financial institutions that ask for your complete SSN
  • Remembering that the IRS does not contact you out of the blue demanding payment or tax information to which they already have access
  • Following IRS guidance for selecting a tax preparer since you will be sharing confidential financial details with this individual

You can also prevent SIRF by getting ahead of these fraudsters and filing your taxes early. If someone tries to use your private information to file a return after you've already filed, then their attempt will rightly be rejected as a duplicate.

Do You Suspect Tax Refund Fraud?

If you believe someone has or is attempting to commit SIRF, report the incident immediately to the IRS Identity Protection Specialized Unit at 800-908-4490. Be prepared to provide details of the incident and any supporting documentation. You must still file an income tax return and pay taxes even while the issue is under investigation. Include IRS Form 14039, Identity Theft Affidavit with your tax return.

Awareness is key to preventing most financial data crimes. When you know how these schemes work, you can make it harder for these bad actors to steal your personal information.