IRS tax fraud and identity theft

Tax identity theft in plain numbers

A thief with your Social Security number can file a return in your name, point the refund at an account they control, and leave you with a rejected e-file and a long paper trail. It tends to hit hardest in filing season, when criminals race real taxpayers to the IRS.

A May 2026 report from the Treasury Inspector General for Tax Administration (TIGTA 2026-400-019) gives the most recent scale. For calendar years 2024 and 2025, using data through November 2025, it reports about $7 billion in fraudulent refunds stopped. Filters selected roughly 7.5 million returns, and about 329,000 of those were confirmed as identity theft.

The filters also catch honest filers, so those totals are not a count of victims. The sections below separate what each number means, describe the main scams, and list the steps that matter if a return is rejected or a notice looks wrong.

How common is tax identity theft in the United States?

It remains a real problem. Thieves often start with a stolen Social Security number and try to file before the true owner does. Learn how to protect your SSN at IRS Identity Theft Central and in our IP PIN and filing security guide. Detection has improved, yet millions of returns still get pulled for extra screening each cycle.

A flagged return is a suspicious return, not always a stolen one. Plenty of real filers trip a filter and have to prove who they are.

How many returns does the IRS flag for identity theft?

TIGTA's May 2026 audit says the IRS selected about 7.5 million individual returns through its identity theft filters across calendar years 2024 and 2025, based on data through November 2025.

The filters look for patterns that match known fraud. When one fires, the IRS typically keeps the return from posting to the taxpayer's account until it can confirm who filed it.

The 7.5 million figure is a count of selections. It does not mean 7.5 million thefts. Some of those returns came from real taxpayers who had to clear extra screening before getting a refund.

TIGTA also reported that the legitimate share of selected returns fell from 55% in processing year 2023 to 52% in processing year 2024. Put simply, about half of the returns pulled for review were filed by the actual taxpayer. TIGTA added that the roughly 2.4 million legitimate returns selected in calendar year 2024 were about 1.4% of the 163.5 million returns filed that year.

How much money does tax identity theft cost?

Losses can be large when a thief gets a refund out the door using someone else's data.

TIGTA reports that the IRS stopped about $7 billion in fraudulent refunds in calendar years 2024 and 2025 (data through November 2025). That is money kept from going out improperly, not money the government lost.

Victims face their own costs, which may include:

• A refund held up while the IRS reviews a suspicious filing.
• Fees and costs to lock down or replace compromised personal data.
• Hours spent answering IRS letters and proving identity.
• Real hardship for households that count on the refund to cover bills.

Even when the fraudulent refund is stopped, the victim's own case can drag on and cause months of stress.

Are tax identity theft cases increasing?

The answer takes more than the raw number of flagged returns. New detection tools, changes in how cases are counted, and better prevention can all move the annual totals.

By TIGTA's data, filters selected about 4.4 million returns in calendar year 2024 and about 3.0 million in 2025. Confirmed identity theft was roughly 185,000 returns in 2024 and 144,000 in 2025. The 2025 figures stop at November 2025, so they should not be read as a real drop.

Outside data points the same way. In an April 2, 2025 FBI public service announcement (Alert I-040225-PSA), the FBI said its Internet Crime Complaint Center (IC3) had received more than 1,000 complaints in the prior year about identity theft tied to tax returns, up 26% from the year before.

Criminals are also adding artificial intelligence (AI) to build more believable phishing messages and voice impersonations, which raises the value of guarding your personal data.

What are the most common types of tax identity theft and IRS fraud?

IRS fraud covers any scheme meant to steal taxpayer data, collect a false refund, or pressure people into paying a bill they do not owe. Refund theft is the best known, but scammers also go after filers and tax professionals in other ways.

Tax refund identity theft

Here a criminal uses someone else's personal data to file a return and claim the refund in that person's name.

The data often comes from breaches, phishing, or stolen paperwork: Social Security numbers, birth dates, and addresses. The thief files a return, sometimes with made-up wages and withholding, and routes the refund to an account they control.

Take Luis, who plans to file in March. When he tries to e-file, the software rejects his return because one under his SSN was already submitted in February. He now has to prove his identity and sort out the false filing.

That cleanup is the part that takes time, and it is why a rejected e-file deserves a prompt response.

Fake IRS emails and text messages

Phishing emails and smishing texts pose as the IRS to get you to hand over sensitive details.

The message may claim you owe money, have an unclaimed refund, or have a problem with your account that needs action right away. The link usually opens a fake IRS site built to capture your SSN, bank details, and passwords. Some messages carry attachments or links that install malware.

The IRS says it does not start contact by unsolicited email, text, or social media message asking for personal or financial information. Do not click unexpected links or reply with details. Our guide to the IRS impersonation scam goes into more detail.

Phone scams and AI-generated voices

Callers pretend to be IRS employees using robocalls and spoofed caller ID. They threaten arrest, a lawsuit, or wage garnishment unless you pay immediately. Some now use AI-generated voices to sound more convincing.

The IRS usually makes first contact by mail. It does not leave threatening prerecorded messages, call to demand instant payment, threaten arrest, or insist on payment by gift card or prepaid debit card.

If a call like that comes in, share nothing and check the claim yourself on IRS.gov.

Social media tax tricks and bad advice

Social platforms can spread false tax tips and refund schemes. Some posts push supposed loopholes that urge viewers to claim credits or report wages and withholding they cannot back up. The IRS has warned about advice that inflates withholding or invents income.

A viral clip might say that typing in made-up withholding will produce a bigger refund. Following it can lead to a delayed refund, penalties, and closer IRS review.

Check any tip against IRS resources or a qualified tax professional before acting on it.

Tax preparer fraud

Preparers see Social Security numbers, income records, and bank details. A dishonest one may misuse that data, pad deductions, claim credits you do not qualify for, or divert your refund.

A ghost preparer is a red flag. That person prepares your return but will not sign it or list the required Preparer Tax Identification Number (PTIN).

You are still responsible for what is on your return, so check a preparer's credentials, read the return before you sign, and walk away from anyone who promises an unusually big refund.

What are the latest IRS tax fraud statistics?

The table below pulls the main figures together. Selections, confirmed cases, and refunds stopped are separate steps in the detection process, so they should not be added or compared as if they were the same thing.

The numbers come from three sources: TIGTA 2026-400-019, the FBI (April 2, 2025 PSA), and the National Taxpayer Advocate. Each covers a different period, so the table is not a single count of confirmed victims.

How many fraudulent tax returns does the IRS catch each year?

The IRS runs identity theft filters and other checks to spot suspect returns before it sends refunds.

TIGTA says about 7.5 million returns were selected across 2024 and 2025, using data through November 2025. A selection is a flag for review, so it does not prove the return was false.

After a return is pulled, the IRS decides whether the filer must verify identity. TIGTA found that about 955,000 of these selections were closed without any notice to the taxpayer during 2024 and 2025, as of November 2025.

That tells us some flags clear on internal review alone, so the filer never has to do anything.

How much in fraudulent refunds does the IRS stop?

TIGTA's May 2026 report puts refunds stopped at about $7 billion for calendar years 2024 and 2025 (data through November 2025). The IRS also trades information with state tax agencies, banks, and tax industry groups through the Information Sharing and Analysis Center (ISAC). Those partners pass along new fraud patterns and suspicious filings.

In fiscal year 2024, outside alerts helped the IRS halt about $9.2 million in refunds tied to confirmed identity theft returns and flag another $49.3 million tied to returns that might be identity theft. The dollar amounts are small next to the overall total, but they show why information sharing matters.

How long does it take to resolve a tax identity theft case?

Stopping a bad refund is quick compared with fixing a victim's case. In its 2025 Annual Report to Congress, the National Taxpayer Advocate said the IRS ended fiscal year 2025 with roughly 316,000 identity theft victim assistance cases in inventory, and that cases took about 21 months on average to resolve.

The Advocate's June 2026 Objectives Report put the delay at about 20 months and counted more than half a million identity theft cases still open when the 2026 filing season ended.

A wait that long hurts households that planned on the refund for rent, medical bills, or other costs.

With waits like these, prevention is worth more than repair.

What are the warning signs of tax identity theft?

The problem is not always obvious. Many people find out only when they try to file or when an unexpected IRS letter arrives. Knowing the common signals helps you catch it sooner.

Your return is rejected because one is already on file

An e-file rejection saying a return was already submitted under your SSN can point to identity theft.

It is not proof, though. A dependent claimed on someone else's return can trigger the same message. Read the rejection text closely and follow the IRS steps for reporting suspected theft.

A notice about income you never earned

An IRS notice or tax form showing income you do not recognize may mean someone used your number to get a job or report fake earnings.

You could get a W-2 from an employer you never worked for, or a 1099 for money you never received. Clerical mistakes do happen, but look into unfamiliar income records instead of setting them aside.

Unfamiliar activity in your IRS account

Changes you did not make to your IRS Online Account, filings you do not recognize, or other odd account activity may signal unauthorized access.

Use a strong password and multifactor authentication where offered. If something looks off, follow the IRS identity theft recovery steps and review your other financial accounts.

An identity verification request you did not expect

The IRS can send a letter asking you to verify your identity when a return trips a filter. Scammers copy that approach to pull out sensitive data.

Before you reply, confirm the letter on IRS.gov. Do not use phone numbers or links printed in a message you cannot verify.

How can you protect yourself from tax identity theft?

Guarding your personal data is one of the best ways to lower your risk of tax identity theft. You cannot stop every breach or scam attempt, but a few habits make misuse harder.

Get an IRS Identity Protection PIN (IP PIN)

An IP PIN is a six-digit number from the IRS that blocks anyone else from filing a federal return under your taxpayer identification number.

The IRS checks the PIN to confirm a return belongs to its rightful owner, so anyone in the program must enter the current PIN on a federal return.

Each PIN works for one calendar year, and a new one is issued every year. A person with an SSN or ITIN who can pass identity verification can request one through an IRS Online Account, and online enrollees must log in again each year to get the new number. Confirmed victims are enrolled automatically and get a new PIN by mail annually. The IRS will not ask you for your IP PIN, so give it only to your tax professional or tax software when you are ready to file.

File early

Thieves usually file early in the season to grab refunds before the real taxpayers do, so filing soon shrinks that window. It is no guarantee, but it helps.

Wait until your W-2s, 1099s, and other forms have arrived before you submit.

Guard your SSN and financial data

Your SSN is among the most valuable items a thief can get. Give it out only when needed, and be careful with it online and on the phone.

More habits that help:

• Keep tax papers and financial records locked up.
• Shred anything with sensitive details before it goes in the trash.
• Use a different strong password for each financial and tax account.
• Turn on multifactor authentication.
• Stay off public Wi-Fi when you log in to money accounts.
• Update your devices and security software.
• Watch credit reports and account statements for activity you do not recognize.

After a data breach, find out exactly what was exposed and secure each affected account.

Verify IRS contact before you respond

Scammers pose as the IRS by email, text, phone, and social media.

Be wary of any message that threatens immediate arrest, asks for gift cards or cryptocurrency, offers a surprise refund in return for personal data, or pushes you to hand over details on the spot.

The IRS typically starts contact by postal mail. When you are unsure, go to IRS.gov yourself to check.

Use a reputable tax professional

A qualified preparer can file an accurate return and handle your records with care. Check credentials, read the finished return before signing, and confirm the preparer lists the required ID number. Avoid anyone who guarantees a refund, asks you to sign a blank return, or suggests reporting numbers that are not true.

What should you do if you become a victim?

If someone files a return using your information, quick action can limit the damage. The IRS has set procedures for reporting suspected theft, verifying your real return, and regaining control of a compromised account.

Report it to the IRS

If you think a federal return was filed under your SSN, start at the IRS Identity Theft Central page for instructions.

You may need to send Form 14039, the Identity Theft Affidavit, though not every case calls for it. Follow whatever any IRS notice tells you to do.

When an e-filed return is rejected because someone already used your SSN, the IRS typically directs you to complete Form 14039, attach it to a paper copy of your real return, and mail both. Keep copies of every letter and supporting document. Our IRS forms directory can help you find the right form.

Secure your accounts and personal data

Change passwords on affected accounts, starting with email, banking, and tax accounts. Turn on multifactor authentication, and call your bank or card issuer if you suspect unauthorized access.

You may also want a fraud alert or credit freeze with the major credit bureaus, which makes it harder for a thief to open new accounts in your name. The Federal Trade Commission's IdentityTheft.gov site gives more recovery guidance.

Keep watching your IRS account and records

Check your IRS account and tax records on a regular basis for activity you do not recognize. Review your account details, watch for unexpected notices, and answer identity verification requests.

Also look at your Social Security earnings record for wages from employers you do not know. Keep a log of IRS letters, phone calls, and documents you send, so follow-up goes faster if something stalls.

Report scams and fake messages

Several government channels take reports:

• Phishing email: forward IRS-related messages to phishing@irs.gov.
• Suspected tax fraud: report it at IRS.gov/SubmitATip.
• Identity theft recovery help: IdentityTheft.gov.
• Internet-related crime: the FBI's Internet Crime Complaint Center at IC3.gov.

Reports can help agencies spot new scams earlier and protect other filers.

How is the IRS fighting tax identity theft and refund fraud?

The IRS combines technology, taxpayer verification, and partnerships with outside groups to find suspect returns and stop bad refunds. Criminals keep changing tactics, so the work never ends.

Identity theft filters

The IRS uses automated filters plus manual review to spot individual returns that may be fraudulent.

The filters score returns against traits of known schemes and odd filing patterns. A selected return is generally held until the IRS can confirm who filed it.

Depending on the situation, you may need to verify your identity or answer a notice. The system is imperfect, and real returns get caught too, which delays refunds and creates work for honest filers. TIGTA's 2026 audit points to the tension between stopping fraud and limiting the burden on legitimate taxpayers.

The Security Summit and industry partners

The Security Summit pulls together the IRS, state tax agencies, and the tax industry to strengthen protections and flag new threats. Through groups like ISAC, members share notes on suspicious activity and emerging scams. That teamwork helps catch false returns sooner and keep refunds away from criminals.

Common scams the IRS warns about

Each year the IRS publishes its Dirty Dozen list of tax scams aimed at individuals, businesses, and tax professionals. Threats that fit this article include:

• Phishing emails and smishing texts that pose as the IRS
• Phone scams that use AI voices
• Takeovers of IRS Online Account access
• Misleading tax tips that spread on social media
• Ghost preparers who will not sign returns
• Spear-phishing and malware aimed at tax professionals
• False claims about income and withholding

The IRS urges filers to stay alert all year, because scammers do not wait for filing season.

How Valor Tax Relief can help

Identity theft cases can hold up a refund for months. Valor Tax Relief helps taxpayers read IRS notices, respond on time, and sort out account problems that come from a false filing.

If the IRS starts collecting a balance you did not create, contact the IRS Identity Theft Victim Assistance (IDTVA) unit or the Taxpayer Advocate Service, and review back tax relief options. For odd calls or letters, check them against the steps in our guide to IRS phishing scams.

Prevention and fast response

Millions of flagged returns and billions of dollars in stopped refunds show how much fraud is out there. Better filters help, but criminals still lean on stolen data, phishing, and impersonation to reach taxpayers.

You can cut your own risk by protecting your SSN, filing early when you can, requesting an IP PIN if you qualify, and treating any unexpected IRS email or text as suspect until IRS.gov confirms it.

If a return is rejected or a notice looks wrong, follow the IRS identity theft steps and report the theft at IdentityTheft.gov. Reading the numbers and knowing the common scams makes it easier to act quickly when something goes wrong.