IRS flagged more than 1 million tax returns for identity fraud in 2023

cnbc.com:

The IRS flagged more than 1 million tax returns for potential identity theft during the 2023 tax season, according to the U.S. Department of the Treasury, signaling that such fraud continues to be a pervasive problem for taxpayers.

Tax-related identity theft occurs when criminals use a taxpayer's personal information to file a return in their name to claim their federal tax refund.

The IRS identified nearly 1.1 million tax returns as potentially fraudulent as of March 2, according to a Treasury report issued to the public Tuesday that analyzed data partway through the filing season. The associated refunds were worth about $6.3 billion.

The IRS had confirmed 12,617 of the tax returns were fraudulent as of the same date in March, Treasury reported. That figure is up from 9,626 tax returns at the same time in 2022.

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Tax-related identity theft has been a problem since about 2004-05, and it «only got worse» since then, said Nina Olson, executive director and founder of the Center for Taxpayer Rights.

«It went from being a one-off [thief] ripping off someone's Social Security number to a whole scheme and organized crime,» Olson said.

Identity theft was the most prevalent type of fraud that consumers reported to the Federal Trade Commission in 2022. A separate report issued last year by the Identity Theft Resource Center suggested that identity crime jumped to an all-time high in 2021.

The IRS increased the number of filters it uses to identify potentially fraudulent tax returns since the 2022 tax season. The agency used