What Business Leaders Need to Know to Prevent Tax Identity Fraud in 2025

It comes once a year.

No, it’s not Christmas, a birthday, or an anniversary.

This is tax season. The time of year when Americans compile their most confidential personal and financial information to file taxes with the federal and state governments. While millions entrust this information to tax preparers, who then strive for accuracy and maximum returns, this personal data can be utilized across many sectors for legitimate reasons by any company with whom they conduct business, transact, purchase or interact with.

You may not know it, but US tax season in the US, is also fraud and scam season.

Last year, Americans lost more than $9 billion from tax fraud and other related financial crimes, and 2025 could be even more precarious as fraudsters look to take advantage of emerging technologies, disruptions to the federal workforce, and tax professionals’ lax data privacy or cybersecurity standards to steal sensitive personal or financial information.

We need a better approach.

Businesses need to provide an incredible customer experience without compromising security or privacy. But during this season of increased risk, business leaders who are involved in financial services, wealth management, tax preparation and any organization that transacts or stores personal and banking related data need to be aware of being a potential target.

The height of tax season – right in the middle of April annually – is a period that presents a uniquely challenging fraud environment. But with the right approach, a proactive risk mitigation practice can be put in place – here’s how:

1. Understand the Impact of GenAI on Fraud

Generative AI (GenAI) is everywhere. Popular GenAI-powered chatbots like ChatGPT, Claude, and Gemini, have hundreds of millions of daily users as people explore the technology, integrate it into their professional workflows, and experiment with its capabilities for various applications.

It’s naive to assume fraudsters aren’t leveraging this technology to support their scams.

Many business leaders already know this (or are at least worried about it).

Our latest Global Fraud Report found that executives consider GenAI the most significant fraud risk over the next 3-5 years.

Notably, GenAI isn’t unlocking new or novel fraud types. It’s amplifying familiar types of fraud, including synthetic identity fraud (SIF) and phishing scams. Nearly 75 percent of executives are worried the technology will make these attacks more prevalent because it can generate highly realistic and convincing content at scale.

These scams, which exploit unsuspecting victims through malicious links, fraudulent requests, or fabricated personas, were prevalent before GenAI. Now less sophisticated and novice fraudsters can create and deploy scams with increased speed and sophistication.

As a result, businesses of any kind that leverage, store, transact or utilize financial and personal data – especially any involved in tax preparation – should be on the lookout for more accurate synthetic identities, an increased volume of phishing or smishing, and more convincing fake IDs.

2.Develop an Omnichannel View in Fraud

Fraudsters are agile and dynamic, constantly changing their tactics to leverage the latest technologies and exploit vulnerabilities to steal valuable information.

In 2025, mobile and online platforms will remain primary targets. Our research found companies recognize this dynamic, as 70 percent say they plan to continue or increase their investment in mobile fraud prevention over the next year.

This is a wise investment, as the rising preference for mobile banking and digital payments creates fertile ground for fraudsters looking to exploit people compiling their tax documents.

However, neglecting the risk of omnichannel fraud is a significant oversight. Specifically, tax preparers should warn and support their contact centers and in-person staff to identify and combat fraud.

To prevent fraudsters from exploiting the vulnerabilities in the financial system’s interconnected online and offline systems, they must develop an omnichannel view of fraud that integrates a holistic, multi-layered approach to identity verification.

Additionally, no business in the financial sector should approach fraud prevention alone. Eighty-one percent of leaders believe collaborative efforts, including cross-sector intelligence sharing, are crucial for effective fraud prevention.

This includes collaborating with international consortia, understanding US tax fraud schemes don’t respect borders or boundaries.

3.Stay Focused on Customer Experience

People have plenty of options when it comes to using financial services and providers, and many are willing to switch providers if their experience doesn’t meet their standards. After all, people want to connect with organizations that can offer them safe and rewarding digital lives.

This starts with knowing what they want.

For example, 57 percent of businesses believe a quick and easy onboarding process is most important to consumers. In reality, while consumers expect a seamless onboarding and frictionless experience, security and data protection are their top priorities.

Specifically, 68 percent of consumers place greater importance on the security of an onboarding process compared to how quick and easy it is.

In other words, your customers won’t endure endless friction but they prefer a safe, financial services experience – especially when it involves tax preparation and securing their data that is connected to their personal finances over a marginally faster but riskier process.

To balance increasing fraud levels and dynamic regulatory landscape with accelerating end-user expectations, financial organizations need to focus on optimizing the conversion of genuine identities at onboarding and beyond without increasing their technical complexity. Innovation in identity orchestration platforms can help support this by treating every customer as an individual with the right check at the right time. With the ability to tailor onboarding journeys and scale up and down checks as needed, your business can confidently protect against fraud, without impacting on the customer experience.

Do You Have a Fraud Prevention Playbook?

Fraudsters are consistently agile, readily adopting new technologies, exploiting vulnerabilities, and innovating for financial gain.

All businesses in the financial sector need to be just as vigilant.

This starts with a proactive fraud protection strategy.

The $9 billion lost last year serves as a stark reminder of the stakes. Moving forward, collaboration, vigilance, and a customer-centric approach to security will be the pillars of a secure and trustworthy tax filing experience.

It’s the best way financial services and providers can safeguard their customers’ sensitive information and maintain the trust that underpins their vital services.

In 2025 security is more important than convenience. With the right playbook, you can accomplish both without compromise and help your business connect safely with every genuine identity in the world.

About the Author: Micah Willbrand has over 20 years’ experience within the identity and biometrics industry. He is currently the Chief Product Officer – Identity Fraud at GBG, the leader in global identity and location intelligence, and is responsible for the product and data portfolio of its global identity solutions, ensuring products are aligned to customer demand.