Tax Identity Theft

Tax identity theft — also called tax return fraud — occurs when a fraudster obtains a victim's name, tax identification number (National Insurance number in the UK, Social Security number in the US), and date of birth, then files a fraudulent tax return claiming a refund. The refund is directed to an account or address the criminal controls. When the real taxpayer later files their legitimate return, they discover one has already been submitted for that tax year.

The fraud can go undetected for months: tax authorities typically process returns on a first-come, first-served basis, and the fraudster aims to file early — often as soon as the tax year opens — before the genuine taxpayer. Victims face a prolonged resolution process: they must prove their identity, file a corrected return, and wait for the tax authority to investigate and reprocess, sometimes taking a year or more.

Tax identity theft also extends to employment tax fraud, where a criminal uses a victim's details to gain employment or claim earned-income tax credits. Protective measures include filing tax returns early, using identity protection PINs where available, monitoring for unexpected tax correspondence, and using secure, shredded disposal of all tax documents.