Is your identity secure … or could someone potentially file a false tax return using your personal information?
The answer may be more complex than you think.
An ounce of prevention is worth a pound of cure for avoiding tax-related identity theft and tax fraud. So read on to learn more about IRS Identity Protection PINs, and discover how they can help you secure your identity during tax season.
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.
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:
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.
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.
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.
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:
Here are a few more things taxpayers should know about the IP PIN Opt-In program before applying:
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.
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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Above & Beyond
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Jeff Coyle, CPA, Partner of Rosenberg Chesnov, has been with the firm since 2015. He joined the firm after 20 years of business and accounting experience where he learned the value of accurate reporting, using financial information as a basis for good business decisions and the importance of accounting for management.
He is a diligent financial professional, able to manage the details and turn them into relevant business leading information. He has a strong financial background in construction, technology, consulting services and risk management. He also knows what it takes to create organizations having built teams, grown companies and designed processes for financial analysis and reporting.
His business experience includes:
Creating and preparing financial reporting, budgeting and forecasting.
Planning and preparation of GAAP and other basis financial statements.
Providing insight on financial results and providing advice based on those results.
Jeff also has a long history of helping individuals manage their taxes and plan their finances including:
Income tax planning and strategy.
Filing quarterly and annual taxes.
General financial and planning advice.
Prior to joining the firm in 2015, Jeff was in the private sector where he held senior financial and management positions including Controller and Chief Financial Officer. He has experience across industries, including construction, technology and professional services which gives him a deep understanding of business.
Jeff graduated from Montclair State University, he is a CPA and member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountants and New Jersey State Society of Public Accountants.
Jody H. Chesnov, CPA, Managing Partner of Rosenberg Chesnov, has been with the firm since 2004. After a career of public accounting and general management, Jody knows the value of good financials. Clarity, decision making, and strategy all start with the facts – Jody has been revealing the facts and turning them into good business results for more than three decades.
He takes a pragmatic approach to accounting, finance and business. His work has supported many companies on their path to growth, including helping them find investors, manage scaling and overcome hurdles. His experience and passion for business reach beyond accounting and he helps businesses focus on what the numbers mean organizationally, operationally and financially.
He has a particular expertise in early-stage growth companies. His strengths lie in cutting through the noise to come up with useful, out of the box, solutions that support clients in building their businesses and realizing their larger visions.
Prior to joining the firm in 2004, Jody was in the private sector where he held senior financial and management positions including General Manager, Chief Financial Officer and Controller. He has experience across industries, which gives him a deep understanding of business.
Jody graduated with a BBA in Accounting from Baruch College, he is a CPA and member of the American Institute of Certified Public Accountants and New York State Society of Certified Public Accountants.
In addition to delivering above and beyond accounting results, Jody is a member of the NYSCPA’s Emerging Tech Entrepreneurial Committee (ETEC), Private Equity and Venture Capital Committee and Family Office Committee.
He is an angel investor through the Westchester Angels, and has served as an advisor for many startup companies and as a mentor through the Founders Institute.
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