How scammers steal your tax refund in 2026 (and how to outsmart them)

What are tax refund scams?

Tax refund scams involve various schemes to steal victims’ personal information and file fake tax returns. 

Common refund fraud tactics include:

• Using leaked or stolen SSNs, birthdates, addresses, or income details to e-file a tax return
• Calling victims and impersonating the IRS or state tax agencies. Fake agents may demand extra payment immediately.
• Phishing texts or emails claiming that the victim needs to “verify” their identity or add missing information to a return. The message links to a phony website that asks for sensitive personal information.
• Posing as legitimate tax preparers (known as “ghost preparers”). The fraudsters then redirect victims’ refunds into scammer-controlled accounts.

Scammers may also lie about unclaimed refunds or credits and pressure victims to share personal, financial, or employer details. If victims don’t respond, scammers may even threaten to call law enforcement or revoke the victim’s driver’s license or citizenship status.

How criminals file before you do

Since most taxpayers file in March or April, fraudsters file early to increase the chances of the IRS accepting their bogus return. But first, scammers need your personal data to file a tax return.

Scammers can track down your tax information using… 

• Large-scale data breaches from hospitals, nursing homes, businesses, and payroll companies, etc.¹
• Dark-web markets that sell SSNs, names, and birthdates²
• Phishing texts or emails that trick you into sharing your personal information³​

Once scammers have the details they need, they file as soon as possible—sometimes within the first week of tax season.

To complete a tax refund scam, cybercriminals typically… 

• Use tax software or dark-web tools to e-file a return using your name, SSN, and fabricated or stolen income numbers
• Transfer the refund to debit cards, or deliver the refund to mailing addresses they can access
• Split or move the money between accounts before the return gets flagged

Why early filing matters

To help prevent tax refund fraud, do as the scammers do: file early! The IRS generally accepts the first valid return it receives under a specific SSN. Once you file your return, scammers’ e-file attempts are more likely to get rejected or flagged. 

Key benefits of filing taxes early:

• You receive your refund faster
• Your claim gets processed before scammers can attempt to file under your name
• If a scammer does try to use your SSN, IRS security checks will likely flag the return as suspicious
• You have more of the tax season to look out for IRS notices or account alerts that may signal identity theft

The earlier you file during tax season, the fewer chances criminals have to submit a fake return in your name.

For added protection from tax scams, explore continuous monitoring options from OmniWatch. Identity monitoring helps safeguard your personal data: it scans for suspicious activity online and notifies you if your personal information has been exposed after a scam.

How to know if someone filed in your name

Scammers act fast, and often their victims don’t find out they've been conned until it’s too late. 

For example, one US taxpayer noticed three attempts to e-file after she logged into her account. Though the return used her real name and SSN, it also listed phony contact information. She lost her $600 refund to the scammer and had to report the fraud to the IRS.⁴

To know if someone filed in your name, look out for these warning signs:

• Your tax software or the IRS rejects your filing because a return with your SSN already exists
• You get an IRS notice about a suspicious tax return with your SSN, a return you didn’t file, or a refund you never received 
• You see alerts that a new IRS online account was created in your name, even though you never set up the account 
• You get an email, text, or call that claims to be from the IRS. (The IRS typically contacts you first by mail. They do not ask for personal information by email, phone, or text.)⁵

In another example of refund fraud, a taxpayer received a convincing call demanding a $5,000 tax payment. The fake IRS agent even threatened to arrest him if he didn’t pay within the hour!⁶

If you suspect fraud, find out if your information is exposed on the dark web. Use OmniWatch to scan the dark web for your information.

IRS identity protection and fraud alerts

The IRS has preventive measures to set up fraud alerts and identity protection. 

1. Tax Refund Scans
   The IRS scans every tax return for signs of fraud. If a return gets flagged as suspicious, the IRS reviews the return and notifies the taxpayer by mail. The IRS will not process the return until the taxpayer responds. If you get an email, text, or call that claims to be from the IRS, beware: this could be a con. 
2. Identity Protection PIN (IP PIN)
   An IP PIN is a six-digit number that taxpayers use to verify their identity when they file an electronic or paper return. Only you and the IRS  will know your IP PIN, so set up an IP PIN for added security during filing.
3. Tax Account
   An IRS.gov tax account lets you view tax return details, check the status of a refund, make payments, view digital IRS notices and balances owed, and more. Create an account to keep your tax details in one secure place.

Tax refund fraud is largely preventable. If you file early and use continuous identity monitoring services, you can reduce the risk of a scammer stealing your refund. 

Bottom line:

Tax-related identity theft can lead to lost refunds, more hassle with the IRS, and exposure to financial fraud. To protect yourself from refund fraud, file early and safeguard your tax information. 

For added identity theft protection, consider our identity theft insurance for peace of mind against scams. You’ll receive early alerts of suspicious activity and get covered for charges associated with a tax refund scam.

OmniWatch is an identity monitoring service, not a consumer reporting agency under the FCRA. You cannot use it for employment, tenant screening, or credit decisions.

1 U.S. Department of Justice, “Stolen Identity Refund Fraud” (2025)

2 Consumer Reports, “Why Child Identity Theft Is a Growing Concern During Tax Season” (2018)

3 Forbes, “The IRS Dirty Dozen: Tax Scams To Watch For In 2026” (2026)

4 Yahoo! Finance, “25 Investigates: Identity theft tax fraud leading to long waits for refunds” (2024)

5 Internal Revenue Service, “How to know it's the IRS” (2026)

6 Consumer Reports, “Tax Scams and How to Avoid Them”