WSJ Your Money Briefing - How to Protect Your Tax Refund From Scammers

Episode Date: March 25, 2025

The IRS is encouraging taxpayers to apply for a six-digit IP PIN to protect their refund from fraudsters. Host Ariana Aspuru is joined by Wall Street Journal tax reporter Laura Saunders, who walks us through the online process of applying for this extra level of protection.   Sign up for the WSJ's free Markets A.M. newsletter.  Further Listening:  Tax Season 2025: What’s New That Could Save You Money  Your Cheat Sheet to Taxes for Investors  How Owning a Home Can Help You Save on Taxes    Learn more about your ad choices. Visit megaphone.fm/adchoices

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their refunds. Untangling the mess of verifying your identity and getting your refund back could take up to two years. And it's a great quick hit for a scammer if they can make it work. They get your personal information, your name, your date of birth, your social security number, your address. They file it in your name at the beginning of tax season and ask for a refund and the IRS may send it to them. We'll talk to Wall Street Journal reporter Laura Saunders about how you can protect your return. That's after the break. This episode is brought to you by Samsung Galaxy.

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took matters into her own hands and figured out some steps to prevent it. And she joins me now. Laura, where would you say before this, you felt on a scale of like super nonchalant to extremely worried about identity theft when it comes to your taxes. I would say I was at about a seven or eight because it doesn't happen always, but when it happens it's such a big mess. And now it can take up to two years to resolve. I'm like the doctor that knows all the diseases that could happen. As a tax reporter, I know what can go wrong. And if you have tax ID theft, it can be awfully complicated to untangle.

With the words identity theft, we often think of someone taking your credit card information, going on a shopping spree, and opening accounts. This is different. How does this work? It's different, and it's a great quick hit for a scammer if they can make it work. They get your personal information, your name, your date of birth, your social security number, your address. They file it in your name at the beginning of tax season and ask for a refund and the IRS may send it to

them. And then when you go to file your tax return the computer says, oh no we already did this one. And so you have to go to the IRS and say, what's happened here? And then they have to untangle it. That can take 22 months sometimes. And the IRS might give it to them? IRS might. The IRS also has a system that detects red flags, and they won't say release it if they see a red flag, but sometimes they miss the red flag.

So if someone is a victim of this tax identity theft how do they go about getting it resolved? You'll get a letter from the IRS probably and they'll have numbers to call and things to do so you follow the process. But dealing with them is it's hard to get them on the phone it's hard to get things done and their systems are slow even if it works the way it's supposed to work it can be slow to untangle. You were concerned about this. You went through the process of trying to proactively prevent it from happening to you. What did you find? I had concerns. I still have concerns, but I decided on balance that it was worth doing.

And since then, we found out that a of high-ups at the IRS have done it as well. The IRS is encouraging everybody to get IP pins and that's just a pin number that you have and you file it with your taxes and the computer won't accept the return unless it has the pin number on it. So if the scammer tries to file a fake return in your name, he won't have it and it'll get rejected. So it's kind of like another, like a passcode to get into your tax return.

That's right, and it changes every year. What's the process of getting one? Like, how hard is it? Well, this is where I had the concerns. The IRS has opened it up to all taxpayers who want one, but they don't have the ability to verify your identity. For that, they turn to an outside contractor. It's a private company called ID.me.

It does a lot of verification. It started with military veterans verifying them, and it's moved to several, like 20 federal agencies and a lot of state agencies, and they verify things for people and they do these services for the IRS. And so you go to them and they put you through a process to tell that you're you. And I was worried about that because I'm turning over my personal information to a private company. And nothing is hack proof. But on balance, I decided it was the right thing

to do. In my case I was on a video call with someone and I had to send a picture of my driver's license front and back and she looked at me online and she verified my identity so then I was able to get right into my IRS account and asked for the IP PIN and I probably got it within 30 seconds or something. It came right away. That part was really good. But I was concerned about that biometric information. And what they say is that it's destroyed 24 hours after you're verified, the biometrics. The photos or like the video of you.

Yeah, the images and where they're comparing images and things like that. And this is the process that the IRS endorses and says, you know, this is safe, we should be using it. It's about the only way to do it. If you want to do it otherwise, you have to go to an office, get an appointment, go see them, and it's very involved. And I tell you, I am not a spring chicken. And the thing that worried me the most was this word,

upload, and video chat chat and things like that. So beginning to end of trying to get this IP, like how long did it take you? For me, it took about less than half an hour start to finish. There was no wait during the height of tax season. Can you get an IP pin for someone who isn't filing their own tax return? Yes, and it could be important to do that. You can actually get one for each member of the family, and the IRS recommends that. It's more complicated and involved if it's a minor. Then you have to actually go to the IRS themselves. You can't do it through ID.me. ID.me does not deal with minors. Laura, how safe do you feel now?

not deal with minors. Laura, how safe do you feel now? Well, I won't feel safe until I've filed a return and use the IP pen and just cross my fingers that it goes well because we haven't had time to get one for my husband yet. And so we have to think about that. But at least I've made a start and I hope it'll go well. That's WSJ reporter Laura Saunders and that's it for your Money Briefing. This episode was produced by me with supervising producer Melanie Roy. I'm Arianna Aspuru for the Wall Street Journal. Thanks for listening. you