Identity theft is a real threat during tax season. If a thief gets hold of your Social Security number and claims your tax refund before you do, you could spend weeks or months getting the snafu ironed out. You'll get your refund eventually. But you'll have wasted a lot of time and effort, and the government will lose the pilfered refund to thieves. 

The good news is that various measures instituted in recent years by the Internal Revenue Service, states, and tax-prep software providers are making a dent in those crimes. The number of taxpayers claiming they were victims of identity theft dropped by 50 percent in the first nine months of 2016, compared with the same period the year before, Forbes reports. And 50 percent fewer fraudulent returns made it all the way through to the IRS processing system.

Still, about a quarter of a million people reported they were fraud victims in the first nine months of 2016, and you don't want to be a new victim this year.

A key way to protect yourself is to file your taxes long before the tax deadline, which is Tuesday, April 18 this year. That move makes it less likely that someone will use your Social Security number on a tax form before you do.

What Victims Can Do

You might not know you’ve been a victim of tax-related ID theft until you get an IRS notice. It might say that you collected wages from an employer you don’t recognize, for example, or that your Social Security number has been used on more than one return.

Report incidents of ID theft to the Federal Trade Commission. Then set up a fraud alert with one of the three big credit bureaus—Equifax  (888-766-0008); Experian (888-397-3742); or TransUnion (800-680-7289). The bureau you choose will share your alert with the other two; all three will give you a free credit report. You can also request that the bureaus issue security freezes to prevent any new credit from being issued without your permission.

At irs.gov, fill out Form 14039, an Identity Theft Affidavit. The IRS will issue you an “identity protection personal identification number” (IP PIN) intended to prevent further fraud. (All residents of the District of Columbia, Florida, and Georgia—not just victims—can get IP PINs as part of an IRS pilot program.)

Avoid IRS Impersonators

The IRS also is making inroads in foiling IRS impersonators. In October of last year, the U.S. Justice Department charged 61 people and entities with participating in a scam in which callers from an India-based call center impersonated IRS agents and other U.S. government officials and extorted phony debts from Americans. The IRS estimates they bilked at least 15,000 Americans of more than $30 million. 

Still, fraud involving IRS impersonators spikes during tax filing season, and could continue to be a problem this year. So remember:

  • The IRS never asks for personal or financial information via email, text, or social media, and it will never contact you by phone to demand payment. Report suspicious email.
  • The agency will never ask for credit-card numbers over the phone, require payment without allowing you to question it or appeal, or threaten you with arrest for nonpayment.
  • Report fraud to the IRS by filling out this IRS form or calling 800-366-4484.

Avoid Other Scams