What Is Tax Fraud? How to Protect Yourself This Tax Season
02/20/2026
By: Fidelity Bank
Tax season is a time to gather documents, file returns, and plan ahead. Unfortunately, it is also a time when tax fraud increases. Understanding what tax fraud is and how to protect yourself can help safeguard your finances, your personal information, and your community.
What Is Tax Fraud?
Tax fraud occurs when an individual or business intentionally provides false information on a tax return, fails to pay taxes owed, or uses someone else’s identity to file a fraudulent return.
Common examples include:
- Filing a return with false income, deductions, or dependents
- Claiming credits you do not qualify for
- Failing to report income
- Using stolen personal information to obtain a refund
According to the Internal Revenue Service (IRS), tax fraud can result in serious civil and criminal penalties.
Why Should You Be Concerned?
Tax fraud does not just affect individuals — it impacts entire communities.
Potential consequences include:
- Civil or criminal charges
- Significant financial penalties and interest
- Identity theft and financial loss
- Reduced funding for essential public services
Beyond legal risks, fraudulent filings can delay legitimate refunds and create long-term financial complications.
Penalties for Tax Fraud
Tax fraud carries severe penalties under federal law:
- Filing a False Return: Up to 5 years in prison and/or fines up to $100,000
- Conspiring to File False Returns: Up to 10 years in prison and additional court-imposed fines
- Credit Disallowance: You may be banned from claiming certain tax credits for up to 10 years
The IRS Criminal Investigation Division actively investigates tax-related crimes to protect taxpayers and the integrity of the tax system.
How to Protect Yourself This Tax Season
1. Choose a Trustworthy Tax Preparer
Work with a reputable tax professional who:
- Provides a valid Preparer Tax Identification Number (PTIN)
- Gives you a complete copy of your return
- Does not base fees on your refund amount
- Does not promise unusually large refunds
Avoid signing a blank tax return under any circumstances.
You can find a vetted preparer using the IRS directory at:
https://www.irs.gov/chooseataxpro
2. Protect Your Tax Return
- Ensure your refund is deposited directly into your bank account — not your preparer’s.
- Carefully review your return before signing.
- Never file a return that includes false information.
3. Be Cautious with Emails and Text Messages
Scammers often impersonate the IRS through phishing emails and text messages. The IRS will not initiate contact via email, text, or social media to request personal or financial information.
Do not click links or download attachments from unknown senders claiming to represent the IRS.
4. Avoid Social Media Tax Schemes
Be wary of online influencers encouraging people to falsify income, withholdings, or credits. These schemes can lead to audits, penalties, repayment demands, and even criminal charges.
If something sounds too good to be true, it likely is.
5. Report Suspicious Activity
If you suspect tax fraud or identity theft:
- Contact local law enforcement
- File a complaint with the IRS
- Call the IRS Identity Theft Hotline at 1-800-908-4490
You can also report a tax return preparer using Form 14157 on IRS.gov.
Free Tax Help Is Available
If you need assistance filing your taxes, the IRS offers free, certified support through its Volunteer Income Tax Assistance (VITA) program:
http://irs.treasury.gov/freetaxprep
For official guidance on tax forms, credits, and eligibility requirements, rely on:
https://www.irs.gov
Stay Informed. Stay Safe.
Tax fraud can threaten your financial stability and compromise your personal information. By choosing reputable professionals, safeguarding your data, and remaining alert to scams, you can file confidently and protect your hard-earned money.
Protect yourself.
Know the signs of tax fraud.
Stay informed this tax season.