For victims of tax refund fraud, legitimate refund payments can be delayed by weeks or even months. Also known as Stolen Identity Refund Fraud (SIRF), this type of identity theft happens when a criminal uses your personal information to file a false tax return and claim your refund. One of the most effective ways to reduce your risk is to file your tax return as early as possible, before someone else can file in your name.
What would you do with a $3,000 payment?
For many Americans, tax season brings an anticipated financial boost. In recent years, the average tax refund has hovered around $2,800–$3,000, and many people rely on that money to pay down debt, cover large expenses, or add to savings.
But what if that refund ends up in someone else’s bank account?
That’s exactly what happens in cases of tax refund fraud. In these situations, a criminal uses stolen personal information—typically a name, date of birth, and Social Security number—to file a fraudulent tax return before the legitimate taxpayer does. When the real taxpayer later tries to file, the return may be rejected, triggering a lengthy resolution process.
Our own data shows that tax-related fraud cases spike every year during filing season, with April consistently among the highest-risk months. Many people don’t discover there’s a problem until their legitimate return is rejected—meaning fraud often isn’t uncovered until it’s already happened.
The good news? There are steps you can take now to strengthen your defenses and reduce the likelihood that your refund will be stolen.
How to protect yourself against tax-related identity theft
While nothing can eliminate risk entirely, these best practices can significantly lower your chances of becoming a victim:
File your return as early as possible. This year, the IRS began accepting tax returns on [date]. If you haven’t already filed your return, now’s the time. Once your return is processed, it’s harder for a thief to file in your name.
Maintain good privacy habits. The IRS recommends all taxpayers take precautions such as using security software, encrypting sensitive information, creating strong passwords, and using multi-factor authentication whenever possible.
Be particularly careful about sharing your Social Security number, both in the real world and online.
Look out for phishing scams. During tax season, tax-related phishing scams are common. Remember that the IRS does not initiate contact with taxpayers through email, text, or social media. Play it safe by ignoring or deleting messages from unknown senders, especially if you notice blurry images, frequent typos, or suspicious links (hover over an embedded link to see its true destination). Be particularly wary of any message that claims to be from the IRS.
Check out the IRS’s tips for choosing a tax preparer. Here’s a short summary: look for one with a Preparer Tax Identification Number (PTIN) and professional credentials, such as a certified public accountant (CPA) license.
What’s an Identity Protection PIN?
An Identity Protection PIN, or IP PIN, is a six-digit code issued by the IRS that can add an extra layer of security to the tax-filing process. In January 2021, the IRS made the Identity Protection PIN program available to all taxpayers. The PIN helps prevent someone else from using your Social Security number to file a tax return.
Essentially, the PIN functions as another factor of identification. Once the IRS assigns one to you, you’ll need your PIN and your Social Security number to file, making it much harder for a scammer to make a claim in your name.
Any taxpayer with a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) can request one each year using the agency’s Get an IP PIN tool.
How to recognize tax refund fraud
Many people discover tax refund fraud during filing season. Warning signs include:
Receiving a letter from the IRS about a tax return you didn’t file
Being unable to e-file because a return has already been submitted using your Social Security number
If you notice either of these signs, it’s important to act quickly.
How we can help resolve tax refund fraud
If you’re an Allstate Identity Protection member and discover an issue during tax season (or at any time) you’re not alone. Our restoration specialists work with you from start to finish to help resolve identity theft issues.
In some cases, our team can work directly with the IRS and assist with required documentation to help move the process forward. While IRS response times can vary, we stay by your side throughout the resolution process.
“The IRS will not call you during the investigation,” notes Patricia Krentz, Restoration Specialist at Allstate Identity Protection. “All communication is handled through mail, and once the investigation is complete, the IRS typically sends a letter confirming the case has been resolved.” Once your case is resolved, the IRS should issue any refunds that were due.