Identity theft is ruling the realm of cybercrime as the world inches closer to complete digitalization. The modern swindlers sift through the reams of information across the web to get their hands on your personal details. Once they have your information, they try to impersonate you, claiming fake reimbursements and making fraudulent returns against your name.
Billions of dollars of losses are incurred every year because of the identity thefts. Tax professionals and accountants are amongst some of the prime targets of the present-day fraudsters. They draw easy profits by misusing your social security numbers, credit card numbers, and other private information which are easily available on the dark web.
The relevance of identity theft issues in the current time can be easily perceived by looking at the following 2019 statistics of the Federal Trade Commission (FTC):
- A total of 3.2 million fraud cases were reported. Of these, more than 650,000 were cases where the victims reported the misuse of their information. So, more than 20 percent of the reported cases were that of identity theft alone.
- Of all the identity theft cases, about 271,823 were specifically credit card fraud. These numbers were 157,715 and 133,096 in 2018 and 2017, respectively.
- About 45,564 issues were about employment or tax-related fraud.
- About 170,255 of the total cases were reported by people falling in the age group of 30-39.
- Even in 2020, the FTC had fielded more than 150,000 fraud cases related to the novel coronavirus and its stimulus, by the end of July alone.
All these stats are a clear indication of the rapid rise in identity-related frauds in the recent past. Therefore, it is extremely important for you, as an individual, a tax professional, or an accountant, to preserve your identity against misuse by modern cybercriminals.
The United States’ Internal Revenue Service (IRS) acknowledges the rising concerns related to identity theft and takes all possible measures to help citizens protect their identities. The Identity Protection PIN (IP PIN) is one such step they introduced to ensure identity protection. The program was initially designed specifically for identity theft victims but it is now being extended for common taxpayers, in phases. Let’s understand what is IP PIN, why is it important for you, and how can you get one for yourself.
What is the Identity Protection Personal Identification Number (IP PIN)
An IP PIN is a six-digit number that blocks someone else from using your Social Security Number (SSN) to file fraudulent income tax returns. It is a confidential number that is meant to be known only to the IRS and you. It is a unique number assigned to every identity theft-related victim and is valid for the current tax processing year only. The IRS verifies your identity via the IP PIN, whenever you file your tax returns, both electronically or through the paper returns.
An IP PIN provides an additional layer of security for protecting the taxpayers against any tax-related crime. It also helps to avoid delayed processing of your tax returns by successfully distinguishing you from your potential imposter. It is an important tool to help you and the IRS thwart identity theft and avoid other problems that arise due to identity theft.
The IRS mails you a CP01A Notice having a unique IP PIN for you to use during that tax year. It does so only after confirming you as a victim of identity theft and resolving your tax account issues. However, from 2021, the IRS will allow you to voluntarily participate in the IP PIN plan as a proactive measure to protect your identity and avert potential tax-related identity theft.
If you wish to opt into the program, you must note that:
- You need to pass a meticulous identity verification procedure
- Your dependents and spouses are also eligible for the program, provided they also pass the identity proofing procedure
How Can You Get an IP PIN
In case you are a confirmed victim of identity theft, then the IRS will automatically mail you a CP01A Notice that has your unique IP PIN, once it resolves your case. However, if you are opting in to the IP PIN program voluntarily, then you need to use the IRS’s ‘Get an IP PIN’ tool.
If you don’t already have an online account on IRS.gov, then you must sign up to verify your identity. Even before you register, the IRS recommends you to go through its secure access identity verification process. It has all the help you will require to register for various self-help online tools of the IRS.
Regarding the IP PIN, you must note that:
- It is a six-digit PIN that is valid only for a single calendar year
- You would need to obtain a fresh IP PIN each year
- The online ‘Get an IP PIN’ tool is usually inaccessible from mid-November to mid-January each year due to scheduled end-of-year maintenance
In case you have already signed up for an IP PIN, or already have one of the ‘Get Transcript’, ‘Online Account’, or ‘Online Payment Agreement’ accounts, then you must log in with the same credentials.
Further, if you have failed to receive your CP01A Notice or have lost an already received annual IP PIN, then you may utilize the ‘Get an IP PIN’ tool for retrieving your IP PIN. For more details on how to retrieve your IP PIN, you can go through Retrieve Your IP PIN.
Alternative Methods to Get an IP PIN
If you are unable to successfully verify your identity via the ‘Get an IP PIN’ online tool and still want to voluntarily participate in the IP PIN program, there are alternative methods that you can follow. However, you must note that the online ‘Get an IP PIN’ tool is the fastest way to obtain an IP PIN and the alternative methods will delay the assignment of your PIN.
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Filing an Application for an IP PIN
If you have an annual income of USD 72,000 or less and are not able to use the online tool, you can file a Form 15227 (Application for an Identity Protection Personal Identification Number). For filing the application, you must have the following:
- An Individual Taxpayer Identification Number (ITIN) or an authentic Social Security Number (SSN)
- An adjusted total income of USD 72,000 or less
- Access to a telephone
The IRS will call you on the telephone number listed on Form 15227 for validating your identity and assigning you an IP PIN. The IRS, for valid security reasons, does not allow you to use the assigned IP PIN for the ongoing filing season. You can use the IP PIN for the following filing season. After this IP PIN has been assigned to you, you shall receive your future IP PINs through the United States Postal Service.
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In-person Authentication
In case you are not able to validate your identity through the online tool or via Form 15227 or somehow you are not eligible to file Form 15227, you can request an in-person meeting for the identity authentication process at a Taxpayer Assistance Center. You must have an identification document to validate your identity and an additional picture identification document.
After successfully validating your identity, the IRS will send you your IP PIN through the United States Postal Service, within three weeks of the verification. Post that, you will receive your IP PINs for subsequent years via mail.
How to Use Your IP PIN
An IP PIN is not meant to be used on all Forms. It is required only on Forms 1040, 1040PR, and 1040SS. You should provide your six-digit IP PIN, whenever prompted by your tax software application. In case you are using a trusted tax professional to prepare your tax return, you can provide the IP PIN to him as well. In order to avoid delays and rejections, you must carefully enter your accurate IP PIN while filing electronic or paper tax returns. In case you miss to enter your IP PIN or enter an inaccurate PIN, your e-filed tax return will be rejected. Moreover, if you have filed a paper tax return, it would be delayed until your IP PIN is validated.
You must keep your IP PIN confidential and should not reveal it to anyone, under any given circumstances. You may, as an exception, can share it with your trusted tax professional. You should also note that the IRS never asks for your IP PIN. If you get texts, emails, or phone calls requesting your IP PIN, you must know that they are scams.
The Bottom Line
The IRS’s six-digit Identity Protection Personal Identification Number is used to verify the right owner of the SSNs mentioned on tax returns. It helps avert the misapplication of your Social Security Number on fraudulent tax returns.
The IP PIN program is extremely beneficial, looking at the current digital landscape where it is comparatively easier for an online fraudster to obtain your information. It is crucial to the IRS’s strategy to keep all the valuable taxpayers protected against potential identity thefts.
The IRS also has an Identity Theft Victim Assistance (IDTVA) organization that is committed to identifying and averting identity thefts. If you are a victim of identity theft, you may reach out to the Identity Protection Unit of the IRS at 1.800.908.4490 between 7:00 am to 7:00 pm, Monday to Friday.
Author Name: Vishwa Deepak
Author Bio: As a content strategist and writer associated with Sagenext, I do more than just stringing letters together into words. My core competency lies in producing useful and amazing content related to technology trends, business, cloud computing, Quickbooks hosting, and finance.