Tax season should bring peace of mind, not headaches. Unfortunately, it’s also a busy time for criminals attempting to steal personal information and claim fraudulent tax refunds. IRS tax refund fraud affects thousands of Americans each year, often before victims even realize their identity has been compromised.
For credit union members and consumers alike, understanding how this fraud works, and how to prevent it, is key to staying protected.
What Is Tax Refund Fraud?
Tax refund fraud happens when a criminal uses your stolen personal information, especially your Social Security number, to file a fake tax return and claim your refund.
Because scammers often file early in the season, many victims only discover the problem when their legitimate return is rejected.
Common ways criminals obtain data include:
- Phishing emails and texts
- Data breaches
- Stolen mail
- Fake tax preparers
- Social media oversharing
Warning Signs to Watch For
Be alert for these red flags:
- The IRS says a return has already been filed under your Social Security number
- You receive IRS notices about returns you didn’t file
- You get tax transcripts you didn’t request
- The IRS reports income from an unfamiliar employer
- Your expected refund is unexpectedly delayed
- You notice unfamiliar activity on financial accounts
Common Scam Tactics
Fraudsters use many approaches to steal tax data, including:
- Phishing emails posing as the IRS or financial institutions
- Text message scams (“smishing”) about refunds
- Fake tax preparers promising unusually large refunds
- Phone scams demanding immediate payment
- Social media messages requesting verification of tax info
Remember, the IRS does not initiate contact by email, text, or social media to request personal information.
How to Prevent Tax Refund Fraud
Take these proactive steps:
- Protect your information
- File your tax return as early as possible
- Guard your Social Security number carefully
- Shred documents with sensitive data
- Use strong, unique passwords
- Enable multi-factor authentication
- Avoid public Wi-Fi when filing taxes
Choose preparers wisely
- Use reputable, credentialed tax professionals
- Verify they have a valid PTIN
- Avoid anyone promising “guaranteed” refunds
- Review your return before filing
Monitor your accounts
- Check bank and credit union statements regularly
- Set up transaction alerts
- Review your credit report annually
Consider IRS protections
- Request an IRS Identity Protection PIN (IP PIN)
- Create an IRS online account
- Use direct deposit to a trusted account
What To Do If You Suspect Fraud
Act quickly if you believe your identity has been used:
- Complete IRS Form 14039 (Identity Theft Affidavit)
- Follow instructions in any IRS notice
- File your legitimate return (paper filing may be required)
- Contact your credit union or bank immediately
- Place a fraud alert with the credit bureaus
- Report the incident at IdentityTheft.gov
Stay Protected This Tax Season
Tax refund fraud can happen fast, but simple precautions go a long way. Filing early, protecting your personal information, and monitoring your accounts are your strongest defenses.
If you notice suspicious activity related to your accounts, contact your credit union right away. Quick action can help stop fraud before it spreads.
