The Internal Revenue Service has announced new refund fraud prevention measures for the 2025 tax season, expanding oversight of suspicious returns and taxpayer identity verification. The initiative, part of a nationwide effort to combat identity theft, introduces stronger screening tools and partnerships aimed at preventing fraudulent refunds and improving taxpayer protection.
The IRS confirmed in October that it will expand its refund fraud prevention program, citing a rise in false refund claims and data theft. The updated protections strengthen the federal tax system by identifying suspicious returns earlier in the process and ensuring legitimate refunds are issued more securely.
Taxpayers claiming high-risk credits such as the Fuel Tax Credit and “Other Withholding” deductions will now be required to provide supporting documentation. Businesses must also complete a new Statement Supporting Fuel Tax Credit Computation form to prove legitimate fuel usage for off-highway or agricultural work.
To verify your identity more effectively, the IRS is promoting its Identity Protection PIN program. This six-digit code prevents unauthorized individuals from filing federal tax returns using stolen personal information. According to the agency, taxpayers who enrolled in the program during the prior year experienced significantly fewer refund-related fraud cases.
The IRS’s Return Review Program remains a cornerstone of the initiative. Using advanced analytics, it flags potentially fraudulent filings before refunds are released. While this may result in additional processing time for some taxpayers, officials say it is necessary to prevent large-scale refund fraud schemes.
The Internal Revenue Service continues to warn taxpayers about new forms of identity theft and online tax scams. Many of these fraudulent schemes circulate on social media, encouraging individuals to submit false information in hopes of receiving inflated refunds.
The IRS has identified scams involving fake withholding claims, fabricated income data, and misuse of business tax credits. These actions not only delay refunds but can also result in civil penalties or criminal charges. Taxpayers are urged to confirm all filing details before submission and to rely only on verified IRS sources.
In collaboration with the newly formed Coalition Against Scam and Scheme Threats (CASST), the agency is sharing data with state revenue departments and private cybersecurity partners. This expanded network allows for faster identification of fraudulent activity across federal and state tax systems.
According to the IRS, these coordinated actions will enhance information sharing, prevent refund losses, and facilitate the more efficient resolution of taxpayer issues when fraud is detected.
The IRS continues to issue identity verification notices to taxpayers when suspicious returns are flagged. Those receiving these letters are asked to respond immediately through official IRS channels. The agency warns that ignoring the notice can result in significant delays in refunds or a further review.
“Taxpayers should be aware of these changes,” said IRS Commissioner Daniel Werfel. “When you receive a notice asking you to verify your identity, act quickly and only use instructions found at IRS.gov.”
Taxpayers who suspect they’ve been victims of refund fraud or identity theft should file Form 14039, Identity Theft Affidavit. Once filed, the IRS will investigate and assign the case to its specialized Identity Theft Victim Assistance program. The agency states that most cases are resolved within 120 days, although some may take longer, depending on the workload.
If you use a tax preparer, the IRS recommends confirming that the individual is registered correctly and signs the return. Preparers who fail to do so may be “ghost preparers” — unlicensed individuals who file false claims and disappear after submission.
In the prior year, IRS data showed a sharp rise in refund fraud attempts, prompting the agency to adopt stricter verification systems. These efforts prevented millions of dollars in fraudulent refunds but also led to longer processing times for legitimate returns. For 2025, the IRS has committed to reducing delays by enhancing communication and streamlining data verification processes.
Taxpayers can prevent many issues by filing electronically, verifying their personal information, and submitting all required documentation upfront. Filing early and using reputable software remain among the most effective ways to prevent refund fraud.
The 2025 filing season begins January 27, with most individual tax returns due by April 15. Taxpayers should visit IRS.gov for updated guidance and confirm that information on each page includes a “page last reviewed or updated” date to ensure accuracy.
Those who need to report fraudulent activity can complete Form 14242 online or mail it to the IRS Lead Development Center in Ogden, Utah. Additional resources, including the Taxpayer Advocate Service, are available for those seeking help with unresolved refund or identity theft cases.
The IRS has announced new steps to enhance refund fraud prevention and taxpayer identity protection ahead of the 2025 filing season. The updates include stronger screening tools, new verification requirements, and closer coordination with state tax agencies and private partners.
Introduced through the Coalition Against Scam and Scheme Threats initiative, these measures aim to reduce fraudulent refund claims and improve taxpayer data security. Taxpayers can review detailed information about the program’s rollout and access official guidance on identity theft prevention through the IRS’s official newsroom and Identity Theft Central resources.
By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now
© 2025 Get Tax Relief Now™. All rights reserved.
