Tax Identity Theft
About Tax Identity Theft
Tax identity theft occurs when someone uses a stolen Social Security number to file a fraudulent tax return and claim a refund. The crime peaked in 2012, when the IRS identified over 1.8 million fraudulent returns using stolen identities, attempting to claim over 2.4 billion. The IRS implemented various filters and verification systems, dramatically reducing tax identity theft. By 2022, confirmed identity theft refund fraud fell to approximately 40,000 returns. However, data breaches at Equifax, Anthem, and other companies continue to expose personal information. The IRS IP PIN program gives identity theft victims a six digit PIN that must be included on their tax return, preventing fraudulent filings. The program has been expanded to all taxpayers in some states. Tax identity theft demonstrates the vulnerability of the tax system to data breaches.
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