IRS Flags 1.1 Million Tax Returns for ID Fraud

The IRS flagged 1.1 million 2023 tax returns by early March as potentially being filed by identity thieves looking to claim $6.3 billion worth of taxpayers’ returns, CNBC reports.

The IRS found only 12,167 of the tax returns were actually fraudulent as of the same date, up from 9,626 fraudulent returns in 2022, the Department of the Treasury said.

Tax-related ID theft is when criminals pose as a taxpayer in order to file their tax return and get their refund.

This type of theft started becoming a problem in 2004 and has become increasingly worse in the nearly 20 years since, says Nina Olson, executive director and founder of the Center for Taxpayer Rights.

“It went from being a one-off [thief] ripping off someone’s Social Security number to a whole scheme and organized crime,” Olson says.

The Federal Trade Commission says identify theft was the No. 1 fraud that consumers reported to it in 2022. The Theft Resource Center issued a report Wednesday saying that ID theft reached an all-time high in 2021, jumping by 36% from the year before to harm 15,000 people.

How to Protect Yourself

The best way for taxpayers to protect themselves from ID theft of their tax returns is to obtain an Identity Protection Personal Identification Number (IP PIN) directly from the IRS. The agency makes it easy for anyone to verify their ID and get this six-digit number right on the IRS website.

Alternatively, taxpayers can submit an application in the mail or in person. The IRS starts making IP PINs available at the beginning of each tax filing season, in mid January.

Experts also recommend filing returns early and using online security measures, such as multifactor authentication, and avoiling suspicious emails or attachments.

The IRS says it never initiates contact with taxpayers via email, text or social media to request personal or financial information.

If you are the victim of IRS ID theft, you can complete IRS Form 14039, an Identity Theft Affidavit.

You should also respond immediately to any notice from the IRS, file a complaint with the Federal Trade Commission at identitytheft.gov, contact one of the three major credit bureaus to place a fraud alert (Equifax, Experian or TransUnion), and check to see if any thief has opened an account in your name and immediately close it.