Tax season fraud is set to spike in 2024 as AI enables cyber criminals to generate lifelike images and make convincing videos that impersonate taxpayers in order to steal their refunds.

Why it matters: Victims of tax-related identity theft wait an average of 19 months for the IRS to correct and send their refunds.

How it works: Scammers gather information about you — like pictures, addresses, employment status and other personal data — that is either publicly posted, available in legal or illegal databases, or stolen through email phishing.

• Then they file a fake tax return before you file your real one.
• AI helps these fraudsters make fakes faster, and enables them to use more sophisticated techniques to defeat IRS and accounting firm security measures.

By the numbers: The IRS received 294,138 complaints of identity theft in 2023, and ended up flagging more than 1 million tax returns for possible identity fraud.

Follow the money: Tax identity fraud "is a great crime, because so many tax refund dollars are transacted" and it's harder to spot suspicious behavior with a once-per-year transaction, Ari Jacoby, founder and CEO of cybersecurity firm Deduce, tells Axios.

• Tax professionals may also be caught off-guard by cyber criminals trying to get them to hand over sensitive client data by posing as real taxpayers.
• Jacoby says AI is particularly difficult for the IRS and tax professionals to deal with "because it is self-learning, trying techniques and failing until it succeeds."

The big picture: Congress' failure to pass federal privacy legislation has also aided identity fraudsters, guaranteeing that mountains of personal data will be available.

• The IRS has long been criticized for inadequate technology but is using Inflation Reduction Act funding to upgrade computer systems and increase audits of the largest corporate taxpayers — typically partnerships with billions in assets.
• The Department of the Treasury used AI systems to identify $375 million in fraudulent transactions in 2023, including check fraud and Social Security and tax refund payments, per Treasury deputy secretary Wally Adeyemo.

The IRS offers these tips for avoiding tax fraud: File as early as possible and use direct deposit to receive refunds.

• The agency also recommends opening an IRS account online to prevent a scammer from doing so in your name.
• Taxpayers should not trust communications claiming to be from the IRS if they come via phone, text or email. The tax agency only contacts taxpayers by mail.

What they're saying: Email scams are one of the main building blocks for cyber criminals looking to pull off identity theft and "pose a real risk to tax professionals and the taxpayers they represent," IRS commissioner Danny Werfel said in January.

The other side: Colin Walsh, tax principal at Baker Tilly, tells Axios that a greater use of AI at the IRS will inevitably lead to cases being identified as possible fraud when no fraud exists.

• "If you have a statistical anomaly that's flagged by the IRS computer system, you're [stuck] in the bureaucracy at that point," Walsh says. He advises "thoughtful and complete" responses to get the IRS off your back.

The bottom line: It pays to file your tax return sooner rather than later.

• Also, tax experts say that greater IRS use of AI means you're now more likely to end up on its radar if you cut corners on your return.

Reddit raised $748 million in its initial public offering, which priced at the top of its expected range last night and begins trading on the New York Stock Exchange this morning, Axios' Michael Flaherty reports.

Why it matters: This is the first social media IPO since Pinterest went public in 2019, and offered some of Reddit's most active users a chance to become shareholders.

• It also gives Reddit a bigger bankroll to grow its business, which finally turned a profit in the fourth quarter of last year.
• The stock will start trading under the ticker symbol "RDDT."

Zoom in: The San Francisco-based company priced the IPO at $34 a share, right at the high point of its $31-$34 per share offering range.

• It first filed to go public in 2021, when Fidelity and others gave it a private market value of around $10 billion. The IPO price values Reddit at roughly $6.5 billion.

The big picture: Reddit will be under elevated scrutiny, including from any of its own volunteer moderators who bought it at the IPO price.

• Reddit is in many ways a throwback to an earlier era of the web.
• It's organized into a myriad of "subreddits" centered on specific discussion topics moderated by volunteers.

Monetizing this content has been tough for the company over the years, and recently Reddit has begun to license its user data to AI companies.

• The Federal Trade Commission has begun an inquiry into at least one of those deals with an unnamed large AI company.

How Reddit's moderators and users react to these and other revenue-boosting projects could determine the company's fate.

• Reddit leadership is betting that they will embrace its growth strategy, particularly as many of them become investors themselves.
• But the service's moderators have already engaged in coordinated mass protests that hobbled Reddit last year, and management will have to tread carefully.

The bottom line: One of the few remaining redoubts of the internet's early participatory spirit will now see its market value spike and plummet every day and with each quarterly earnings report.

• Samsung plans to launch an AI accelerator chip in early 2025. (Tom's Hardware)
• GitHub is using AI to fix code vulnerabilities with its newly released feature for GitHub Advanced Security customers. (TechCrunch)
• Stability AI — the makers of Stable Diffusion — may be losing key researchers. (Forbes)
• Senators signaled after a classified briefing that their most likely next step on TikTok will be to hold a hearing. (Axios)
• Drone delivery is working in Dallas-Fort Worth — but on-the-ground elements of the service need work. (Axios)
• Glassdoor users have been furious to find their real names attached to employer feedback on the site made famous for its anonymous reviews. (ArsTechnica)

Sex is back at the Olympics — supported by a supply of 300,000 condoms for roughly 14,000 athletes and officials.