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Tax identity theft is a serious issue for the IRS as fraudsters continue to find new ways to steal taxpayers’ Social Security numbers and other personal information to file false tax returns. According to a 2019 U.S. Government Accounting Office report, the IRS estimates it unwittingly paid at least $110 million in fraudulent tax refunds in 2017. The growing problem of tax identity theft affects both taxpayers and tax professionals who prepare returns for their clients.

To help fight fraudsters, the IRS created the Identity Protection PIN (IP PIN) to prevent fraudsters from obtaining a tax refund using a stolen Social Security number. It is a six-digit number that is similar to two-factor authentication to require two sources of identification and authorization to file a tax return. Initially, the IP PIN program was available only to professional tax preparers and victims of identity theft, but now the IRS is expanding the program to all taxpayers who apply for it.

The IP PIN Program – What You Need to Know

• The IRS will automatically provide past victims of identity theft with an IP PIN. This will be provided through CP01A notices mailed from the IRS.
• Taxpayers who were not the past victims of identity theft could still request an IP PIN from the IRS.
• Taxpayers could get an IP PIN through the online portal on the IRS website. This is the fastest way to get an IP PIN. However, the portal is generally unavailable mid-November through mid-January each year.
• Alternatively, taxpayers could also apply for an IP PIN by filing IRA Form 15227, Application for an Identity Protection Personal Identification Number.  
• Once an IP PIN is issued, taxpayers will need to confirm their identity through a verification process.
• Spouses and dependents of taxpayers may also use the program, but they will be required to follow a separate verification process.
• When filing their returns, taxpayers should carefully enter the IP PIN electronically or by paper to avoid rejection or filing delays.
• The IRS will never request that taxpayers provide the IP PIN. Do not provide this information by email, fax, or phone to anyone who claims to be from the IRS.
• Taxpayers should remain vigilant for fraudsters and keep their IP PIN secure.
• An IP PIN is valid for one calendar year.
• You must obtain a new IP PIN each year.

More information on the IP PIN registration process is available at irs.gov.

Have a question? Contact us today at askus@lgt-cpa.com