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Refund Fraud Prevention

You’ve worked hard to get your refund, but there are unfortunately people in the world who commit identity theft. Today, we talk about the systems in place to protect your refund, steps you can take, and how Practical Accounting Solutions protects you, too!

How Virginia Tax and IRS Protect You

In Virginia

Virginia uses an automated system that flags anything suspicious in their refund review process. Should a red flag appear, you may get a letter in the mail requesting additional information. In the last year alone, they have prevented $37 million of fraudulent refunds. They also utilize PINs (Personal Identification Numbers) that are used to identify possible victims of identity theft.

See more information about your state tax protections here.


The IRS has continued to become more active in safety over the years. Their annual Security Summit hosts the tax community from over 42 agencies and 20 industry offices. The attendees include tax preparation firms, software developers, payroll and tax financial product processors, and professional tax organizations and financial institutions. This community comes together annually and works in task groups to find solutions to 6 different challenges.

The IRS also created the Information and Analysis Center (ISAC). This center serves as a formal public-private collaborative partnership in increasing security and protecting taxpayer identities. Its role includes facilitating information between the public and private sectors regarding tax refund fraud, creating a forum environment to discuss different responses to safety measures, and promoting new methodologies, data analyses, and strategies to protect taxpayers.

National Tax Security Awareness Week

Each December, the Security Summit uses this week to educate taxpayers, businesses, and tax professionals on how to enhance their online security for the upcoming tax seasons. Examples of past themes include data protection plans, encouraging strong passwords, education on phishing scams, Cyber Monday security, and toolkits to identify identity theft.

This week also has various awareness campaigns. For example, Taxes-Security-Together educates tax professionals to review their current security practices. Security 101 is a toolkit for tax professionals to better protect their taxpayer data, and Don’t Take the Bait was a campaign to increase awareness of phishing scams.

How You Can Protect Yourself

Even with these campaigns and committees in place, there are steps you can take to ensure protection, too! For one, never answer questions about your tax return to an unknown person over the phone, email or mail. Even better, file your taxes electronically, through a tax professional, and early! When searching for your tax professional, ask them about what measures they take to keep your information safe.

Here are 5 common signs someone else is using your information:

  1. More than One Return was Filed Using Your Social Security Number

  2. You Received an Unexpected Notice of Additional Tax

  3. You Received a Refund You Didn’t Request

  4. You had Collection Actions Taken Against You in Error

  5. The IRS Notified You a False Return was Filed

If you Are a Victim

Here is a checklist of steps if you are a victim of tax fraud:

Our Commitment to You

We are committed to protecting your information during and after your time with us. We follow a Secure File Transfer Protocol (SFTP) and only exchange information with you through this secure portal. We also keep your files in a safe place on our protected office computers. Lastly, only your CPA has access to your personal information. Any sensitive information we use internally is anonymized and also shared through secure portals. If you have any questions about our safety measures, please feel free to reach out!


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Disclaimer: The views presented in this post are meant as educational resources and should not be taken as direct advice for your personal finances or small business. Should you have questions regarding a post relating to your specific finances, please contact us at

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