The 2025-2026 tax season is here!

While many are not looking forward to it like they are warmer weather, some are excited to learn they could be getting a refund.

That is … if fraudsters don’t take it first!

NexTier Bank is here to help you understand Tax Refund Fraud, how it could impact you, and the red flags to look for.

⚠️ Tax Refund Fraud: What You Need to Know

Tax season is a prime time for scammers. One growing scam is tax refund fraud, where criminals use stolen personal information to file a fake tax return in someone else’s name and claim their refund.

💰 What Is Tax Refund Fraud?

Tax refund fraud happens when a criminal:

  • Steals your personal information (Social Security number, date of birth, etc.)
  • Files a fraudulent tax return before you do
  • Directs the refund to their own account

Often, victims don’t discover the fraud until their legitimate tax return is rejected or they receive a notice from the Internal Revenue Service (IRS) stating that a return has already been filed.

🚩 Red Flags to Watch For

Be alert if you experience any of the following:

  • You receive a letter from the IRS about a tax return you did not file
  • Your electronically filed return is rejected due to a duplicate filing
  • You receive a tax transcript or refund check you didn’t request
  • You’re asked to provide personal information by phone, email, or text from someone claiming to be the IRS
  • You receive unexpected notices about online IRS accounts or password resets

Remember: The IRS does not initiate contact by email, text message, or social media asking for personal or financial information.

🔐 How to Protect Yourself

Taking a few proactive steps can significantly reduce your risk:

✔ File Early

File your tax return as soon as you have the required documents. Filing early makes it harder for a fraudster to beat you to it.

✔ Protect Personal Information

  • Never share your Social Security number unless absolutely necessary
  • Be cautious with unsolicited calls, emails, or texts
  • Use strong, unique passwords for financial and tax accounts

✔ Use Secure Tax Preparation Services

Work with reputable tax professionals or secure tax software.

✔ Monitor Financial Accounts

Regularly review your bank accounts and credit reports for suspicious activity.

🛑 If You Suspect Tax Refund Fraud
  • Respond immediately to any legitimate IRS notice
  • Contact your bank if you believe your account information has been compromised
  • Report identity theft at IdentityTheft.gov
  • Place a fraud alert on your credit file

Here are the three most common ways customers become victims of tax refund fraud:

 1. Data Breaches & Stolen Personal Information

Criminals frequently obtain Social Security numbers, dates of birth, and other sensitive information through:

  • Corporate or healthcare data breaches
  • Compromised payroll providers
  • Hacked tax preparation services
  • Dark web purchases of stolen identity data

Once a fraudster has a Social Security number and basic identifying information, they can file a fraudulent tax return before the legitimate taxpayer does.

 2. Phishing & IRS Impersonation Scams

Scammers often pose as the Internal Revenue Service through:

  • Fake emails claiming a refund or tax issue
  • Text messages about “stimulus” or refund updates
  • Phone calls threatening arrest or penalties
  • Fake IRS websites designed to steal login credentials

If a customer clicks a malicious link or provides personal information, the fraudster can use that data to file a fake return.

3. Compromised Tax Preparation Accounts

Fraudsters target:

  • Online tax software accounts with weak or reused passwords
  • Email accounts tied to tax filing
  • Tax preparers with poor cybersecurity controls

If criminals gain access to a taxpayer’s account, they can:

  • Change direct deposit information
  • File an altered return
  • Redirect the refund to their own bank account

For more information on tax scams and fraud from the Internal Revenue Service, click here.