Annual Probability of Tax-Related Identity Theft

Tax-related identity theft occurs when someone uses another person's Social Security number to file a fraudulent tax return and claim a refund. The IRS receives approximately 1 million reports of tax identity theft each year, though prevention measures have significantly reduced successful fraud. The IRS prevented about $24 billion in fraudulent refunds in 2023.

Victims typically discover tax identity theft when they try to file their return and it is rejected because a return has already been filed with their SSN, or when they receive an IRS notice about income from an employer they don't recognize. Resolution can take 6-18 months and requires filing Form 14039 (Identity Theft Affidavit) and providing documentation.

Prevention measures include filing tax returns early in the season (before criminals can file with your SSN), using the IRS Identity Protection PIN program (which assigns a unique 6-digit PIN needed to file), securing SSN information, watching for data breach notifications, and monitoring for suspicious IRS correspondence. The IRS will never initiate contact via email, text, or social media to request personal information. About 30% of identity theft reports to the FTC involve tax-related fraud.