Why is the IRS Identity Protection PIN Important?

According to the FTC, with more than 1.4 million cases of identity theft reported across the nation in 2021, a 45% increase over previous years, this is of significant concern for all Americans — and never more so than during tax filing season when tax-related identity theft is most common. In an annual report covering the 2021 fiscal year, the IRS highlighted over 2,500 criminal investigations and the identification of more than $10 billion from tax fraud and financial crimes.

So, what does that mean for you, the average taxpayer?

While tax season is the busiest time of the year for the IRS, it can also be when identity thieves and fraudsters peak their activities. The financial consequences can be significant and demoralizing, and recovering can be time-consuming and frustrating. To make matters worse, cybercriminals grow more sophisticated every day with their methods of stealing your personal information and using it to file false tax returns.

Fortunately, the IRS has made it a top priority to crack down on tax fraud. As part of that effort, they have recently expanded their Identity Protection PIN Opt-In Program to all taxpayers who can verify their identities — and they are encouraging all taxpayers to enroll.

Can someone steal your identity with tax information?

In short: Absolutely. Tax-related identity theft can happen to anyone, and fraudulent tax activity has increased notably in recent years. It occurs when someone uses your stolen personal information, including your Social Security number, to file a tax return claiming a fraudulent refund.

Even worse, you may not know you’re a victim of identity theft until the IRS notifies you of a possible issue with your return.

Be alert to potential tax-related identity theft if:

  • You get a letter from the IRS inquiring about a suspicious tax return 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, 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 for whom you didn’t work.
  • You’ve been assigned an Employer Identification Number but did not request an EIN.

Fortunately, there are concrete steps you can take immediately if your personal information is compromised — we discussed them on this blog recently. However, the best option is to avoid being the victim of tax-related identity theft altogether.

That’s where the IRS Identity Protection PIN comes in.

What is the IRS Identity Protection PIN?

An IRS Identity Protection PIN (IP PIN) is a six-digit number that prevents someone else from filing a tax return using your Social Security number or Individual Taxpayer Identification Number.

As such, this PIN serves as a critical defense against identity thieves.

So, how does the IP PIN work?

Like any other PIN, it helps to verify your identity. The IP PIN is known only to you and the IRS, so when you file your electronic or paper tax return, it authenticates that you are whom you say you are, thereby protecting your account and personal information.

The IRS Identity Protection PIN is not a new government program. The IRS launched the IP PIN program nearly a decade ago to protect confirmed identity theft victims from ongoing tax-related fraud. In recent years, the IRS expanded the program to specific states where taxpayers could voluntarily opt into the IP PIN program. Now, the program is going nationwide, meaning you no longer need to be a victim of identity theft to get an IP PIN.

If you are a confirmed victim of tax-related identity theft and the IRS has resolved your tax account issues, they will send you a new PIN each year.

“This is a way,” said IRS Commissioner Chuck Rettig, “to, in essence, lock your tax account, and the IP PIN serves as the key to opening that account. The IRS will reject electronic returns that do not contain the correct IP PIN, and paper returns will go through additional scrutiny for fraud.

Is the IP PIN program mandatory?

No, the program is voluntary — however, the IRS highly recommends taxpayers take this proactive step to protect themselves from tax-related identity theft.

If you want to request an IP PIN, please note:

  • You must pass an identity verification process.
  • Spouses and dependents are eligible for an IP PIN if they can pass the identity verification process.

Here are a few more things taxpayers should know about the IP PIN Opt-In program before applying:

  • The IP PIN is valid for one calendar year. Each January, the taxpayer must obtain a new one.
  • The Get an IP PIN tool is offline starting in November each year and becomes available again in mid-January.
  • You must be sure to enter your IP PIN correctly on electronic and paper returns to avoid rejections and delays.
  • There is currently no opt-out option, but the IRS is working on one.
  • Never share your IP PIN with anyone but your trusted tax provider. Beware of scams to steal your IP PIN — the IRS will never call, text, or email requesting your number.

How do I get an IRS IP PIN?

The fastest way to obtain an IP PIN is by using the online Get an IP PIN tool between mid-January and mid-November. If you don’t already have an account on IRS.gov, you must register to validate your identity using the Secure Access authentication process. If you cannot successfully validate your identity using this tool, there are alternatives to apply for your PIN. However, these methods take longer than the online tool for the IRS to assign your IP PIN to you.

If your adjusted gross income is $72,000 or less, you may complete Form 15227 and mail or fax it to the IRS. Then, an IRS customer service representative will contact you to verify your identity by phone (be prepared to reference your prior year’s tax return during this verification process).

If you use this process, the IRS will mail you an IP PIN the following tax year and each subsequent tax year.

Suppose you cannot verify your identity online or by phone and are ineligible for Form 15227. In that case, you can contact the IRS and make an appointment at a Taxpayer Assistance Center to verify your identity in person. Remember to bring two forms of identification, including one government-issued photo ID.

In closing…

Tax fraud and identity theft scams are everywhere, making it critical that taxpayers are well-informed about avoiding becoming victims. Taking advantage of the IRS’ expansion of the Identity Protection PIN is a highly effective way to take proactive action to protect yourself today.

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