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When you file your taxes, you expect a straightforward process: submit your return, wait a few weeks, and receive your refund. But if you’ve noticed delays, additional verification steps, or unexpected holds on your money lately, you’re not imagining things. The way we pay taxes and receive refunds has fundamentally shifted in recent years, driven largely by a surge in tax fraud that’s forced the IRS to rethink its entire approach.
Understanding these changes isn’t just about managing expectations. It’s about protecting yourself in an environment where criminals are becoming more sophisticated, while the government responds with tighter controls.
How Tax Filing and Returns Have Changed
The days of quick refunds are gone for many taxpayers, replaced by a system designed to catch fraud before it happens rather than cleaning up the mess afterward.
Let’s start with timing. Under the PATH Act, the IRS cannot issue refunds before February 15 for anyone claiming the Earned Income Tax Credit or Additional Child Tax Credit. This isn’t arbitrary. It’s a deliberate pause that allows the agency to verify information before releasing funds. In 2024 alone, over 1.9 million returns were suspended for identity verification. That’s nearly two million people who had to prove they were who they claimed to be before getting their own money back.
The IRS has also changed how it processes returns on the backend. Instead of immediately accepting your filing, the agency now waits to receive W-2 data directly from employers. This matching process helps them spot discrepancies between what you report and what your employer reports, reducing fraudulent refunds that claim inflated income or nonexistent withholdings.
Then there’s the payment method itself. Paper checks are being phased out. The IRS is pushing taxpayers toward direct deposit by making it the default and, increasingly, the only practical option. If you don’t provide accurate bank account information for your 2025 return, you could face a six-week delay. For many families counting on that refund to cover bills or debt, six weeks might as well be six months.
These aren’t punitive measures. They’re protective ones. But they require you to be more prepared and more patient than ever before.
Common Tax Fraud Schemes and Red Flags
So why all the new precautions? Because tax fraud has evolved from a niche crime into a full-scale industry.
Identity theft is the biggest culprit. Scammers steal Social Security numbers and file fraudulent returns early in the tax season, claiming your refund before you even sit down to prepare your taxes. By the time you file your legitimate return, the IRS flags it as a duplicate. Now you’re the one who has to prove your identity and wait months to receive what’s rightfully yours.
Preparer fraud is another growing problem. Not every tax professional operates with integrity. Some dishonest preparers change direct deposit information without your knowledge, routing your refund into their own accounts. Others file returns without authorization, create bogus deductions to inflate their fees, or promise refunds they know you’re not entitled to. If someone guarantees you a specific refund amount before looking at your documents, that’s your first red flag.
Then there are the “too good to be true” scams. You might receive a call, email, or social media message promising an enormous refund through credits you’ve never heard of, like the Fuel Tax Credit, which applies only to off-highway business use. These schemes prey on people who are unfamiliar with tax law and desperate for extra cash.
On the more sophisticated end, abusive tax schemes involve offshore trusts, shell companies, or fictitious loans designed to hide income. Promoters often claim these strategies are perfectly legal ways to avoid taxes. They’re not. And if you get caught using one, the penalties can be devastating.
How to Protect Yourself
Awareness is your first line of defense, but there are concrete steps you can take to safeguard your refund and your identity.
Start by checking your information carefully. Use the IRS Where’s My Refund? A tool to track your return status and verify that your bank account details are accurate before filing. A single wrong digit can send your refund into someone else’s hands.
Consider requesting an Identity Protection PIN directly from the IRS. This six-digit code is assigned to you each year and must be entered when you file. Without it, no one can submit a return using your Social Security number, even if they have all your other personal information.
If you do become a victim of tax fraud, report it immediately. Contact the IRS Identity Protection Specialized Unit and file a report with the Federal Trade Commission. Don’t wait. The sooner you act, the faster you can begin the recovery process.
Finally, educate yourself. The IRS publishes an annual “Dirty Dozen” list of the most common tax scams. Reviewing it each year takes just a few minutes and can save you from falling prey to the latest schemes.
Moving Forward with Confidence
Tax season doesn’t have to be stressful. Yes, the process has changed, and yes, more criminals are trying to exploit the system. But armed with the right knowledge and a proactive approach, you can file confidently and protect what’s yours.
At Western Bank, we understand that financial security extends beyond your checking and savings accounts. It includes every aspect of your financial life, from protecting your identity to managing your money wisely. Whether you need guidance on setting up direct deposit for your refund or simply want a trusted partner who puts your security first, we’re here to help. Contact us today to learn how we can support your financial well-being this tax season and beyond.
