By Stephanie Casey, CPA, Tax Senior Manager | Family, Executive & Entrepreneur Advisory Services Team
An Overview of the IRS Identity Protection PIN Program
What is tax identity theft?
Tax identity theft — the filing of fake tax returns using stolen identities — is a form of tax fraud that affects thousands of taxpayers every year. According to the Internal Revenue Service (IRS), in the first five months of 2017, approximately 107,000 taxpayers were victims of tax identity theft.
Tax-related identity theft occurs when someone uses your stolen personal information, including your Social Security number, to file a tax return claiming a fraudulent refund.
If you suspect you are a victim of identity theft, continue to timely pay your taxes and timely file your tax return, even if you must file a paper return.
Surprisingly, you may not even know you are a victim of identity theft until after the fact when you are notified by the IRS of a possible issue with your return.
Be alert to possible tax-related identity theft if:
- You get a letter from the IRS inquiring about a suspicious tax return that you did not file.
- You can’t e-file your tax return because of a duplicate Social Security number.
- You get a tax transcript in the mail that you did not request.
- You get an IRS notice that an online account has been created in your name.
- You get an IRS notice that your existing online account has been accessed or disabled when you took no action.
- You get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you did not file a tax return.
- IRS records indicate you received wages or other income from an employer you did not work for.
If you have been the victim of tax identity theft, it will ultimately be resolved – it just takes a long while to work with the IRS to correct your account.
Once you are a confirmed victim of identity theft and the IRS has resolved your tax account issues, the IRS will automatically enroll you in the Identity Protection PIN (IP PIN) program and mail you a notice with your IP PIN each year. Once you have an IP PIN, a tax return cannot be filed in your name without that number. Keep in mind that, at this time, the IP PIN is mailed to you (paper notice) and not provided electronically.
Starting in 2021, you may voluntarily opt into the IP PIN program as a
proactive way to protect yourself from tax-related identity theft.
If you want to opt-in, please note:
- You must pass a rigorous identity verification process.
- Spouses and dependents are eligible for an IP PIN if they can also pass the identity proofing process.
What is the process for obtaining aN IP PIN from the IRS?
If you are volunteering for the IP PIN Opt-In Program, you should use the online “Get an IP PIN” tool. If you don’t already have an account on www.IRS.gov, you must first register and validate your identity.
I registered myself to see how easy or difficult the process would be. I am happy to report the entire process took less than 6 minutes.
Set up an account with all of your pertinent information including name, address, date of birth and social security number.
Input an account number from one of the following:
- Last 8 digits of a Visa, MasterCard or Discover card
- Student Loan account number
- Auto loan account number
- Mortgage or home equity line account number
Input your cell phone number so you can receive an activation code. Upon receiving and entering my activation code, the IRS “confirmed” my identity.
Finish setting up your account with a log in and password.
After that, you are only a few clicks away from receiving your 2021 Identity Protection Pin. Your IP PIN should be used for all current year and prior year returns filed during calendar year 2021.
How to Use an IRS IP PIN
You will need to enter the six-digit IP PIN when prompted by your tax software product or provide it to your trusted tax professional preparing your tax return.
Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays. An incorrect or missing IP PIN will result in the rejection of your e-filed return or a delay of your paper return until it can be verified.
Do not reveal your IP PIN to anyone. It should be known only to your tax professional and only when you are ready to sign and submit your return. The IRS will never ask for your IP PIN. Phone calls, email or texts asking for your IP PIN are scams.
Important IRS IP PIN items to note
- The IP PIN only applies to your federal income tax return, not state returns. Many states have similar programs with some being mandatory following identity theft while other programs may allow opt in.
- An IP PIN is valid for one calendar year only.
- You must obtain a new IP PIN each year.
- The IP PIN tool is generally unavailable mid-November through mid-January each year.
Unfortunately, despite increasing security, we are seeing more and more identity theft cases. We suggest you consider using the IP PIN as the process is fairly easy and provides an increased level of protection. I am going to put a reminder on my calendar for early January of every year and make sure I get my IP PIN.
Additional Taxpayer Security Resources
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.