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With the start of the new year comes tax season, a yearly process that requires individuals to look over how much money they paid in income tax and add up deductions. It can be highly stressful for some for many reasons. It can also shine a light on a form of identity theft that only happens during this time of year.
Taxes are a Requirement
Love it or hate it, taxes and tax season are a part of living in the United States and being a taxpayer. For the majority of the population, taxes are a necessary inconvenience, but they still do them. They either get a refund or pay additional taxes and go the rest of their year not really thinking about taxes at all if it can be helped.
Tax-Related Identity Theft
While not exceedingly common, there are individuals who have had their identity stolen for the sole purpose of collecting tax refunds from unsuspecting taxpayers. This could have happened by someone working under a fake social security number, or specifically for the purpose of filing a tax return, in hopes of securing the refund before the legitimate taxpayer can file.
Identity theft can be difficult and life affecting on a typical day, but for individuals who are anticipating a tax refund, being told their identity was stolen and their refund is gone is even worse. While the overall amount of tax-related identity theft has gone down in the last five years, this year a projected 477,000 taxpayers will learn they have been a victim.
Tax-Related Identity Theft 2015-2018
| Year | Number of Tax Refunds with Identity Theft Confirmed | Refund amount affected |
| 2018 Projected | 477,600 | 4.8 Billion |
| 2017 | 597,000 | 6 Billion |
| 2016 | 883,000 | 6.4 Billion |
| 2015 | 1.4 million | 8.7 Billion |
Although the numbers may appear high, every year over 125,000 individuals submit their tax forms to the Internal Revenue System. To see how our members are affected by this form of identity theft, we reached out to 900 members. We spoke to members about if they had ever been a victim of tax-related identity theft and if they had, what the financial impact of the theft was per individual.
Percent of Credit Sesame members who have experienced tax-related identity theft 2015-2017
| Year | Percent of Credit Sesame Members affected by tax-related identity theft | Financial Impact of Tax-related Identity theft to members (Per Person) |
| 2017 | 0.29% | $6,251 |
| 2016 | 0.42% | $8,853 |
| 2015 | 0.5% | $9,570 |
Source: Survey conducted of 950 Credit Sesame members on January 15, 2019.
Since 2015, there has been a 42 percent decrease in identity theft cases with our members surrounding tax season. While those numbers are promising and show, what we hope to be, an overall drop in tax season related identity thefts, for those members, it’s still an average of $6,251 in tax refund money they will not receive. It also brings along with it the headache of having to prove and reprove your true identity numerous times in order to file your legitimate tax returns.
We spoke to one member, Tiffany, who had her identity stolen for the sole purpose of taking her return.
Tiffany lost her tax refund to identity theft.
We spoke to Credit Sesame member, Tiffany after she discovered her identity had been stolen along with her tax refund.
| Source Information (Interviewee) |
| We spoke to Tiffany in May of 2018. She is a 38-year-old who lives in Jacksonville, Fla. She works as a personal assistant, is married, and she and her husband are trying to have children. |
| Member Since | 3/16/2017 |
| Q | How did you discover you had become a victim of identity theft and tax return fraud? |
| A | I went to file my taxes and found out someone had already used my social security number to file taxes and the IRS had already sent out the check. |
| Q | What have you been able to do to repair the damage and how long has it taken or is projected to take before it’s resolved? |
| A | It has taken a long time to get it fixed, and I’m still not confident it’s totally over. The IRS told me I needed to wait a year after I first reported it because they wanted to make sure it wasn’t a mistake in filing by the person who used my social security number. I guess sometimes people put in the wrong number by mistake and it doesn’t get caught. So when I went to file my taxes the second year, they told me again I had already filed and received my check. I also had to fill out and mail in a Form 14039 Identity Theft Affidavit as well as file a complaint with the FTC at https://www.ftccomplaintassistant.gov in order to get a complaint reference number. They wanted me to file a police report, which I did, but was then told I had to file a report in the county of the person who had used my number (that info was on the transcripts of my return the IRS sent me). I live in Florida. The check was sent to North Carolina!
Luckily, I usually file my taxes fairly early so it hasn’t really affected my credit score because I was able to contact the credit bureaus and have them place a fraud alert on my credit report. |
After hearing Tiffany’s story, it’s no wonder that some consumers fear the tax season.
The Fear of Taxes
Many Americans are afraid of tax season. Whether these fears are justified or not, they are real enough to the individual. The anxiety coming from that fear causes some individuals to just throw up their hands and refuse to do their taxes at all. This shouldn’t be the way it is. Credit Sesame spoke to consumers about why they are afraid of tax season and what, if anything, Credit Sesame can do to alleviate some of those fears.
Anxiety around filing taxes
| Age Group | Lack of understanding of new tax rules | Worry about making an error | Can’t afford to pay a professional | Owe taxes, unable to pay them |
| Gen Z | 48% | 42% | 54% | 13% |
| Millennial | 42% | 80% | 27% | 31% |
| Gen X | 35% | 61% | 13% | 42% |
| Baby Boomer | 28% | 60% | 8% | 51% |
| Silent Generation | 30% | 25% | 2% | 27% |
Source: Survey of 2000 member and non-members who were surveyed on January 15, 2019.
As shown, the fear many people have is they are worried they will make a mistake, or they can’t afford a professional. You don’t need a professional to do your taxes unless you fall into certain categories, such as unusual tax circumstances, owning your own business, or having a lot of rental or other property. For the majority of the population, they are can do their taxes with the help of online and offline programs. For many people, they push off doing their taxes to the point of incurring fees and penalties.
Procrastination Surrounding Taxes
There are two groups of people: those who do their taxes when they first receive their tax documents by the end of January, and those who wait until the last possible minute to file. We wanted to know who procrastinates the most when it comes to tax season by gender and age. This information can help in determining how we can help consumers be better prepared come tax season.
Age and gender group data regarding tax-related procrastination
| Age Group | Male Procrastinator | Female Procrastinator | Total Percent of Population |
| Gen Z | 7% | 9.5% | 8.25% |
| Millennial | 17.75% | 13.25% | 15.5% |
| Gen X | 18% | 16% | 17% |
| Baby Boomer | 8.5% | 4.5% | 6.5% |
| Silent Generation | 1% | 0.5% | .75% |
Source: Survey of 2000 member and non-members who were surveyed on January 15, 2019.
Not everyone waits until the last minute, but on average more men wait than women. In fact, an average of 10.45 percent of men state they have waited until the deadline, or even after the tax deadline. This is compared to only 8.75 percent of women who stated the same thing. Overall, the majority of the population prepares and submits their taxes on time, which is good because postponing until after the deadline can have fees and other penalties attached.
Conclusion & Summary
Tax season can be highly stressful, and there are many people who fear the whole process. It’s not something to be afraid of. If you are unable to hire a professional, there are several online programs that can help, and now many of them are free. While you may feel like there’s no time left, there is still just over a month left before the deadline. If you are unable to get everything ready by then, you can submit a request for an extension that pushes the deadline out to October. Whether you are done with this year’s taxes or not, start preparing for next year, keep all documents needed for taxes in one location, and not a shoe box. This way when tax season comes next year, and it will, you will be more prepared and ready to hit the ground running.
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