New Cloaked Data Shows Surge in AI-Powered Tax Fraud

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Tax season is stressful enough without someone stealing your identity. But for millions of Americans, that's exactly what happens, and it's getting harder to spot the threat. A new Cloaked survey of 1,000 U.S. adults found that 1 in 7 Americans have had their identity stolen or misused during tax season, and the average victim lost $1,444 in the process.

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What's more, AI is making things worse. The scams are more polished, making it harder to distinguish between fake and real messages. Here's what the data reveals about who's getting targeted, how scammers are pulling it off, and what you can do to protect yourself before you file.

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Key Takeaways

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• 1 in 7 Americans (14%) have had their identity stolen or misused during tax season.

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• Nearly 3 in 10 Americans (29%) say they experienced an AI-generated scam in the past year, and Gen Z was the most likely to encounter one (37%).

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• The average tax identity theft victim lost $1,444, and only 34% were fully reimbursed.

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• 27% of Americans don't feel confident they could spot an AI-generated IRS scam.

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• More than 1 in 3 Americans (35%) say they've encountered false or potentially fraudulent tax advice on social media, with TikTok ranking among the top platforms where users report seeing tax misinformation.

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When Tax Season Becomes Identity Theft Season

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Tax identity theft is a widespread problem, with real financial and emotional consequences. And for many victims, the worst part is finding out about it after the damage is already done.

Overall, 14% of Americans have had their identity stolen or misused during tax season. With 9% saying it happened within the past 2 years, this is an active and ongoing problem.

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For most victims, discovery didn't come until after the damage was done. The most common ways people found out included:

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• Notification from a credit monitoring or identity protection service (34%)
• Communication from the IRS (26%)
• Receiving a rejection notice because a return had already been filed (23%)
• Getting an unexpected refund they never requested (23%)

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The average victim lost $1,444, and the road to recovery is long. About 2 in 3 victims (65%) spent at least 3 months resolving their case, including 7% whose cases are still unresolved. Only 34% were fully reimbursed, 32% got some money back, and 12% received nothing at all. Another 41% of victims said the theft also hurt their credit score or broader financial standing.

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The Scam Playbook

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Many Americans have received messages claiming to be from the IRS or a government tax agency that raised red flags. The tactics vary, but the goal is always the same: to get you to hand over your personal information before you realize what's happening.

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More than half of Americans (52%) received at least one suspicious communication claiming to be from the IRS or a government tax agency in the past 12 months. On average, they received 4.1 such communications. Phishing emails were the most common (31%), followed by:

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• Text messages (24%)
• Phone calls (17%)
• Fake websites (8%)
• Social media DMs (6%)
• Fake tax preparer (4%)
• In-person attempt (3%)

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Most people saw through it, 68% identified the scam immediately, but 30% were initially unsure or believed the communication was legitimate. That's nearly 1 in 3 people who came close to being fooled. And 13% went further, reporting that they clicked a link, shared personal information, or sent money. Nearly 1 in 10 (8%) entered their Social Security number or other sensitive data on a site they later realized was fake.

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More than 1 in 3 Americans (35%) had seen tax advice on social media that turned out to be wrong or fraudulent. TikTok and Facebook were the biggest sources of tax misinformation, each cited by 15% of respondents, followed by Instagram (12%), YouTube (9%), Reddit (8%), and X (6%). Gen Z reported the highest exposure, with 51% saying they've come across misleading tax advice on social media.

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AI Is Raising the Stakes

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It used to be easier to spot a fake IRS message, but AI has changed that. Scam messages now look and sound like the real thing, and Americans are aware of it.

Nearly 3 in 10 (29%) said they received an AI-generated scam in the past year, with Gen Z the most likely to report one (37%). At the same time, 27% of Americans said they don't feel confident they could identify an AI-generated message posing as the IRS, a gap that scammers can exploit.

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Around two-thirds of Americans (65%) agreed that AI is making tax scams more convincing and harder to detect, and 46% said they're more worried about tax fraud this year than last, specifically because of AI.

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Despite the heightened concern, 56% of people haven't taken concrete steps to protect themselves. Among those who did act, the most common steps were:

• Filing taxes earlier than usual to get ahead of fraudulent filings (15%)
• Setting up an IRS online account (14%)
• Enrolling in the IRS Identity Protection PIN program (14%)
• Checking "Where's My Refund" earlier than usual (13%)
• Requesting a free credit report (12%)
• Placing a credit freeze (10%)
• Purchasing an identity monitoring service (5%)

Protecting Yourself Before You File

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Tax scams aren't going away, and with AI making fraudulent messages harder to detect than ever, it's worth taking a few simple steps before you file. Filing early is one of the most effective ways to prevent tax identity theft, since a fraudster can't submit a return using your Social Security number if you've already filed.

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Enrolling in the IRS Identity Protection PIN program adds another layer of protection. And if something feels off about a message claiming to be from the IRS, trust that instinct. The IRS first initiates contact about a tax issue by mail, never by text, email, or social media DM. When in doubt, go directly to IRS.gov.

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Methodology

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This survey was conducted online among 1,000 U.S. adults in March 2026. Respondents were asked about their experiences with tax-related identity theft, suspicious communications claiming to be from the IRS or government tax agencies, social media tax misinformation, and attitudes toward AI-powered fraud. The sample includes respondents across gender (49% women, 49% men) and generation (48% millennials, 26% Gen X, 16% Gen Z, 10% baby boomers).

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Percentages for single-select questions are based on the total number of respondents. Questions about identity theft experiences and discovery methods were asked only of respondents who reported experiencing tax-related identity theft (n=138). Financial loss figures reflect an interquartile range-adjusted average excluding zero-dollar responses, to account for outliers. All figures are rounded to the nearest whole number.

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About Coaked

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Cloaked is a privacy and identity protection platform that helps people regain control over their personal data. Whether you want to remove your information from data broker sites, create secure aliases for every sign-up, or monitor the dark web for exposed data, Cloaked gives you the tools to protect your identity year-round, not just at tax time.

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Fair Use Statement

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If you'd like to share or reference this report for noncommercial purposes, you're welcome to do so with a link back to this page and proper attribution to Cloaked as the source.

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