Income tax identity theft is a major problem that costs taxpayers billions of dollars and can delay your tax refund by many months while the IRS investigates the matter. While the IRS has gotten somewhat better at discovering income tax identity theft before paying out a fraudulent return, they are still nowhere near as good as they can and should be in preventing this type of crime.
The crime itself is quite simple. An identity thief uses your Social Security number obtained in any number of ways and files a phony income tax return using a counterfeit W-2 to claim a sizable refund. If the IRS pays a refund, which they often do, in response to the phony income tax return, the person whose Social Security number was used in filing the phony income tax return will find that the IRS will flag their legitimate income tax return when it is later filed because of it being the second income tax return filed with the same Social Security number. It takes the IRS 278 days on average to investigate incidents of income tax identity theft causing the victims to have to wait that long before they can receive their legitimate income tax refund.
The vast majority of people file their income tax returns electronically so it should come as no surprise that a scam that is now being perpetrated involves an email you receive that appears to come from the IRS asking you to update your e-filing information including your Social Security number and bank account information. Don’t do it. It is a scam. The IRS will not communicate with you by emails or text messages.
The simplest way to avoid income tax identity theft is to file your income tax return as early in the year as possible in order to beat the identity thief to the punch. If your legitimate income tax return is filed before the identity thief tries to file an income tax return using your Social Security number, your refund will have already been sent by the IRS.
As for avoiding the phishing emails that appear to come from the IRS, the easiest way to avoid this scam is to follow the rule of never providing personal information in regard to an email until you have confirmed that the email is legitimate and there is a legitimate need for the information to be provided. In this case, in particular, you don’t need to even bother to look into whether the email is legitimate or not because the IRS will never initiate contact with you by an email so you can ignore it.