Two years ago, Sam, a high-school teacher in his 30s, filed his taxes online and got a confusing surprise: a rejection notice. When he Googled the rejection code, he learned that someone else had filed under his Social Security number, a common practice that identity thieves use to intercept and steal people’s tax refunds. He had been defrauded.
Sam called the IRS helpline and, when he finally got someone on the phone, followed their instructions: He froze his credit, changed his passwords, and put alerts on his bank accounts and credit cards. The agent also told him that he could no longer file taxes electronically. He had to fill out a special form and then file on paper, via mail, and wait for his refund — over $2,000 — to crawl through the agency’s system. The process would take approximately 420 days.
When Sam asked why the timeline was so long and bizarrely specific, the agent explained that the IRS was overwhelmed with fraud cases; the number of days represented where Sam stood in the growing queue of others just like him. But it wasn’t guaranteed or even accurate. “They said the number of days might change,” says Sam, who, like the other victims interviewed for this story, asked to use a pseudonym to protect his privacy. “The last time I called to check, it had increased to 563 days.” He still has not received his refund. Then, the nightmare repeated itself — Sam’s identity thief beat him to file again in 2024, and that refund got held up too. When he got through to another fraud agent, he was given new information: He needed to register for an Identity Protection PIN number that he would use in lieu of his Social Security number to file taxes going forward. “Obviously, I wish I had learned that earlier, and apparently I will need a new PIN every year for the rest of my life,” he says. “Which is annoying, but whatever — I just want this to be resolved.”
Since the saga began, Sam has gotten married, had a baby, moved to a new city, and started a new job. “The two years’ worth of refunds, which now add up to thousands of dollars, would have helped us pay down debt and made a really meaningful difference in our lives,” he says. “The fact that we continue to pay taxes without getting what’s owed to us is incredibly frustrating.”
Tax fraud is a booming business and has ballooned in recent years as identity theft becomes ubiquitous. (“Everyone should just assume that their Social Security number has been compromised at this point,” says Rus Garafolo, the founder of Brass Taxes, a tax-preparation firm.) According to a Treasury report, the IRS flagged 1.9 million tax returns as potentially fraudulent last April, up from 1.1 million the same month in 2023. Clearly, it is not catching the vast majority of fraud in time — most people don’t find out they’ve become victims until months after the fact. And if it’s happened once, it’s likely to happen again, like it did to Sam: Last year, there was an acceleration in repeat cases of fraud related to identity theft. The FBI reported an alarming 26 percent increase in similar complaints in the past year.
With the Trump administration slashing IRS workers and resources, the situation is likely to get much, much worse. “The way some of my clients talk about it, it’s like they’ve given up,” says Garafolo. “They just reach this level of acceptance where they don’t want to spend anymore of their precious time or energy fighting it. And I understand that, but I also find it really sad. It shouldn’t be so much work to clean up a mess that isn’t your fault at all — it was just bad luck that your number got pulled.”
Online identity theft isn’t the only way crooks mess with people’s taxes. Andrea, a social worker who lives outside of Houston, had her refund check stolen straight out of the mail. (She had requested a direct deposit, but for some reason the IRS sent a check anyway.) When she realized it hadn’t shown up, she had to file a claim and fill out a bunch of forms to trace the payment. Then, the IRS sent her a yellow envelope that contained a copy of her refund check, scanned by the bank where it was cashed, for her review. The number on the check was correct, but the name had been changed — a process known as bleaching or washing, where criminals erase the ink on a check in order to rewrite it and cash it themselves.
“I just couldn’t believe how brazen it was,” says Andrea. “The guy had written his own name right on my check!” That said, the name was so common — “John something, I can’t remember” — that she’s not sure he’s real. She still hasn’t received her refund, about $2,800, which she was planning to invest in her Roth IRA. “I feel like the IRS should pay interest on this money if it takes so long to return,” she says. “With inflation being what it is, that money is worth significantly less now than it was a year ago. It’s not just inconvenient. This has real financial costs.”
As for whether “John something” will get caught — she’s not holding her breath. Most IRS criminal investigations are focused on drug traffickers and national security threats, not identity thieves making off with individual refund checks. “I did ask if they were doing anything about the perpetrator, and they told me there would be an investigation,” Andrea says. “I have zero confidence that it will go anywhere, considering they can’t even manage to get my check to the right person.”
For other victims, tax fraud is harder to pin down. Beth, who lives in Queens and works at an ad agency, started having issues with the IRS last year after her mail stopped showing up. She went to her local post office and learned that there had been a rash of postal worker muggings in her neighborhood. “My first thought was, Who wants to steal mail?” she says. “Now, I understand that during tax season, it’s potentially lucrative.”
Beth has subsequently received letters from the IRS alerting her that someone has used her Social Security number, but when she tried to call about it, she sat on hold for hours before hanging up. “I’m a contract worker, so I almost always owe money after I file my taxes,” she says. “My fear isn’t that someone stole my refund — I’m more worried that I might have a big bill or some mistake that I don’t know about.”
Like Sam, she registered for an IP PIN this year — which anyone can do and is recommended as a general safeguard. Now, she’s just hoping for the best. “It’s not a great feeling, especially because I can’t get in touch with anyone who can tell me what’s going on,” she says. “It’s like this black box, and there could be something very bad in it, but I have no way of knowing.”
There is no shortcut for resolving tax fraud, and there’s no sugarcoating it, either: The process will take a while, says Amy Northard, a certified public accountant who has helped many clients deal with fraud over the years. However, for most people, it’s pretty straightforward. If you’re a victim of tax-related identity theft, you can fill out a form online and then file your taxes by mail without having to make any excruciating phone calls. “From there, the IRS will contact you with updates and when your case is resolved,” says Northard. You can also check on the processing status of your forms online, although you might not be able to glean much.
If you suspect you might be a victim but aren’t sure yet, it’s a good idea to keep an eye on the status of your tax refund, which you can do online. “That way, you can report it if it goes missing as quickly as possible,” says Northard.
Heaven forbid you encounter more complications, but if you do have to get on the phone, Garafolo recommends calling the IRS fraud line, not the general number; there’s often a shorter hold time (even still, get comfortable; there’s no telling how long you’ll wait). Unfortunately, there isn’t an email address.
Once you get someone on the line, be polite, says Chase Spenst, the founder of Good Operator, an accounting firm based in Los Angeles. “The IRS is a lot like the DMV in that it’s a mixed bag of who you might talk to, but they are human, and I’m always surprised at how nice they are,” he says. “Their job is hard and pretty thankless. You represent an opportunity for them to have a good part of their day. They’re usually just regular people with accounting degrees, and they’ll be sympathetic to your situation.”
Spenst also recommends asking the agent if you can follow up with them about your case directly. “They might not say ‘yes,’ but it’s worth a try,” he says. “When we’ve had issues with clients in the past, I’ve found it’s really helpful to get a single person to guide you through the process. Otherwise, you talk to one person who gives you three steps, and then you get another person who says, ‘I don’t know who told you that, but it’s actually four steps.’ And then you do those and call back and get someone else who says, ‘No, actually the first person was right.’ I mean, get it together, guys.”
Another avenue to try is the Taxpayer Advocate Service, an independent organization within the IRS that helps taxpayers resolve issues including fraud. “You can call or even visit a local office in person,” says Northard. That said, it might just tell you to fill out the same forms and wait. “I’m not sure that the taxpayer advocate could push anything faster,” she says. “Usually, the minimum time to resolve a stolen tax refund is 120 days, but on average it’s over 400. And at the rate the IRS is moving currently, it could take a couple of years.”
Spenst was equally pessimistic. “With cuts in the IRS workforce, it’s only going to get less efficient at handling individual nuanced cases,” he says. “It’ll be a slog. I’d set calendar reminders to call and check in every six months or so. Be consistent and tenacious about it. Your case just has to work its way through a system that’s stretched way too thin.”
And if you don’t have the time or energy to spend hours chasing answers? “I figure, the IRS will get in touch with me if they need to,” says Beth, the contract worker whose mail was stolen. “If I miss a letter, they’ll send another one. They know where I live. I hate not knowing, and I do worry about what I might owe, but I can’t let it consume me.”
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