Filing season will be here before we know it. If 2020 was any indicator, tax professionals could see a substantial number of electronic and simple returns as everyone deals with continued social-distancing policies and future Economic Impact Payments.
With more taxpayers and non-filers going digital—last year saw an almost 11 percent increase in e-filed returns!—it just makes sense for them to take steps to better secure their data. After all, identity thieves are more than happy to get their grubby mitts on tax refunds. Luckily, the Internal Revenue Service has expanded its Identity Protection Personal Identification Number (IP PIN) program, opening it up to all taxpayers.
What is an IP PIN?
“The Identity Protection PIN (IP PIN) is a six-digit code known only to the taxpayer and to the IRS,” the agency explains in its press release. “It helps prevent identity thieves from filing fraudulent tax returns using a taxpayers’ personally identifiable information.”
Originally only available to taxpayers who completed Form 14039, Identity Theft Affidavit, the IRS began allowing individuals in select states to voluntarily opt in to the program. 2021 is the first year that any taxpayers can sign up for an IP PIN—hopefully preventing identity thieves from fraudulently filing tax returns with stolen personally identifiable information.
To help you better explain IP PINs to clients (or help you decide if you want one), we’ve listed the bullet points from the IRS press release below:
- “This is a voluntary program.”
- “You must pass a rigorous identity verification process.”
- “Spouses and dependents are eligible for an IP PIN if they can verify their identities.”
- “An IP PIN is valid for a calendar year.”
- “You must obtain a new IP PIN each filing season.”
- “The online IP PIN tool is offline between November and mid-January each year.”
- “Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays.”
- “Never share your IP PIN with anyone but your trusted tax provider. The IRS will never call, text or email requesting your IP PIN. Beware of scams to steal your IP PIN.”
- “There currently is no opt-out option but the IRS is working on one for 2022.”
Those who decide they need an IP PIN will need to complete the signup process.
How do I sign up for an IP PIN?
There are three new methods to sign up for an IP PIN:
- IRS.gov/IPPIN — IP PIN available immediately after signup is completed
- Form 15227, Application for an Identity Protection Personal Identification Number (only available if your AGI is $72,000 or less) — IP PIN mailed the following tax year due to security concerns
- In-person appointment at a Taxpayer Assistance Center — IP PIN mailed within three weeks
Since the IP PIN is designed to prove that the information on the return actually belongs to who is sending it to the IRS, the agency obviously needs to confirm your identity. That means you will need to provide the agency some key information during the sign-up process.
When using the IRS website, you’ll need to either have an existing IRS account or provide the information required by the agency’s Secure Access authentication (found at IRS.gov/SecureAccess).
If you submit Form 15227, the IRS says you will be called by “an IRS customer service representative … [who verifies your identity] by phone.” Make sure to have a prior year tax return handy for that call.
Scheduling a Taxpayer Assistance Center appointment is generally reserved for those who can’t take advantage of the other two signup methods. Verifying your information in this way will require “two forms of identification, including one government-issued picture identification.”
After successfully signing up for and receiving an IP PIN, a new number will be mailed to you every year unless you opt out of the program.
Finally, those issued an IP PIN due to being victims of identity theft don’t have to do anything differently to keep having a new number issued every year. (If you are a victim of identity theft, check out this IRS page about filling out Form 14039: https://www.irs.gov/newsroom/when-to-file-a-form-14039-identity-theft-affidavit.)
Stay safe out there!