10 Signs of Tax Fraud: Is Someone Stealing Your Refund?

SAVING & SPENDING - TAXES
Don't let someone else cash in on your hard-earned tax refund.
Updated April 9, 2024
Fact checked
handcuffs over Income tax return documents

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Tax fraud and identity theft are scourges on taxpayers’ wallets. According to the Federal Trade Commission, Americans lost nearly $6 million to IRS imposters in 2023.

Tax-related identity theft involves the unauthorized use of personal information, such as a Social Security number, to file a fraudulent tax return and claim a refund.

The signs are not always easy to spot, but here are 10 you should be on the lookout for so you can help protect your finances.

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A tax form you don’t recognize arrives in the mail

bioraven/Adobe yellow mailbox with mails outdoor

You probably know who you worked for over the last year, so if you see a bizarre W-2 or 1099, it's worth investigating.

If you receive forms for income you don't recognize, it could signal either identity theft or, here's hoping, a company error. If possible, contact the issuer for corrections, and it's never a bad idea to notify the IRS.

You receive a 1099-G for unemployment benefits you didn’t collect

Yurii Kibalnik/Adobe 1099-G Certain Government Payments form

While this borders on the ironic and perhaps darkly expected, your unemployment payments get taxed.

But if you got a 1099-G and didn't receive unemployment benefits, someone may have used your identity to claim them, resulting in income reported to the IRS under your name. This might land in the "obvious things are obvious" category, but it can happen.

Duplicated Social Security numbers prevent you from e-filing

steheap/Adobe unfilled USA social security card

This shouldn’t come as much of a surprise, but you can’t e-file multiple times using the same Social Security number. The IRS will notice this and prevent a second return from being filed.

In fact, the agency lists it as among the first signs of data theft. So if you’re not allowed to e-file, it’s a sign someone else already did — in your name.

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Your tax preparer seems suspicious

makibestphoto/Adobe male accountants reviewing data

Much like a horror movie, the tax preparer down the street might not be who they claim to be.

If your tax preparer insists on signing your return early or directs IRS payments to them, it's suspicious. That could mean they plan to file a fraudulent return or bail with your money. 

Beware of ghost preparers who avoid signing or providing an IRS Preparer Tax Identification Number.

Someone emails or texts you about a refund

A_B_C/Adobe woman scrolling smartphone in street

Scammers are constantly working to get your information and steal your money. Remember that the IRS will never email or text you about a tax refund.

If you get an email or a text from someone purporting to be from the IRS, whatever you do, don't click any of the links. It's just a way for some scammer to steal your identity or infect your device with malware.

The IRS says you created an online account… but you didn’t

Who is Danny/Adobe mysterious man hacking computer in room

Fun wine weekends aside, you probably know what you have and haven’t done. If the IRS notifies you that someone has created an online account, but you didn’t, that’s a giant red flag that your data has been accessed.

The best thing to do is to contact the IRS and law enforcement immediately.

The IRS sends you a letter about a return you didn’t file

will milne/Adobe Mailman Delivering Mail in mailbox

The IRS is wise to all kinds of shenanigans that tax cheats try to employ. When it spots something fishy, the agency will send you a letter. 

That letter could be a Letter 5071C, Potential Identity Theft with Online Option, a Letter 4883C, Potential Identity Theft, or a Letter 5747C, Potential Identity Theft In Person Appointment.

The IRS asks taxpayers to follow those letters’ instructions, no pun intended, to the letter.

You get a notice from the IRS you owe for a year you didn’t file or a collection action is underway

PheelingsMedia/Adobe woman opening envelope at desk

Owing the IRS more money than you were told, or worse, having a collection agency after you, is a nightmare scenario. The IRS also says it’s a sign you should file an identity theft affidavit.

That’s Form 14039. It’s available both in digital and paper formats.

You receive an Employer Identification Number when you didn’t ask for one

Joshua Resnick/Adobe african american woman checking mail outdoors

As one might presume from the name, an Employer Identification Number (EIN) is used by the federal government for business purposes. If you have employees, you probably need one.

But if you don’t even have a business or you didn’t apply for an EIN and one is assigned to you, the IRS says that could be a sign of tax identity theft.

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You get a phone call from the ‘IRS’

ronstik/Adobe call from unknown number on smartphone

Similar to how the IRS doesn’t text or email, as mentioned before, it doesn’t make phone calls, either.

Charlatans may try to make it appear like their caller ID is legitimate, but they don’t believe it. They’re trying to scare you into picking up.

Bottom line

Vitalii Vodolazskyi/Adobe Tax fraud written on audit report

Don't let identity theft and tax fraud steal your peace of mind. By staying vigilant, you can protect yourself. File your taxes as usual and watch for red flags like rejected returns or unexpected W-2s.

Take control of your financial well-being by regularly monitoring your accounts and promptly reporting any suspicious activity to the FTC or IRS.

Remember, both the FTC and IRS offer convenient online fraud reporting options.

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Author Details

Will Vitka Will Vitka is a D.C. area reporter and writer. He previously worked for WTOP, The New York Post, Stuff Magazine, and CBS News.

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