Learning Center
The IRS Identity Protection PIN: A Shield Against Identity Theft
In an era where identity theft is a growing concern, safeguarding personal information has become paramount. The IRS Identity Protection PIN (IP-PIN) is a crucial tool in the fight against tax-related identity theft. This article delves into the intricacies of the IP-PIN, its role in protecting taxpayers, and how individuals can leverage it to secure their identities.
What is an IP-PIN? - An Identity Protection Personal Identification Number (IP-PIN) is a six-digit number assigned by the Internal Revenue Service (IRS) to eligible taxpayers. This number is used to verify a taxpayer's identity when filing federal tax returns, ensuring that only the legitimate taxpayer can file a return using their Social Security Number (SSN). The IP-PIN acts as an additional layer of security, preventing identity thieves from filing fraudulent tax returns in the taxpayer's name.
The Role of IP-PIN in Identity Theft Cases - Identity theft, particularly tax-related identity theft, occurs when someone uses a taxpayer's stolen personal information to file a tax return and claim a fraudulent refund. This can lead to significant financial and emotional distress for the victim. The IP-PIN is a proactive measure to combat this issue.
When a taxpayer is a confirmed victim of identity theft, the IRS assigns them an IP-PIN to protect their future tax filings. This ensures that even if a thief has access to the taxpayer's SSN, they cannot file a return without the IP-PIN. The IRS uses this number to authenticate the taxpayer's identity and accept only valid returns.
How the IP-PIN Works - The IP-PIN is used in conjunction with the taxpayer's SSN when filing a tax return. It is entered on the tax return in a designated field, allowing the IRS to verify the taxpayer's identity. If a return is filed without the correct IP-PIN, the IRS will reject it, preventing fraudulent filings. Note that the IRS will never call, email, or text a taxpayer requesting the IP-PIN.
Each year, the IRS issues a new IP-PIN to the taxpayer, ensuring that the number remains secure and effective in preventing identity theft. This annual renewal is crucial, as it prevents thieves from using an old IP-PIN to file a fraudulent return. For security reasons, IRS generates new IP-PINs at the beginning of each calendar year. Some participants will receive their IP-PIN in the mail, while others will have to log into their IRS Online Account to view their current IP-PIN.
IP-PIN holders should not share their IP-PIN with anyone other than their tax return preparer.
Eligibility and Application Process - Initially, the IP-PIN program was limited to taxpayers who had already been victims of identity theft. However, recognizing the growing threat of identity theft, the IRS expanded the program in 2021 to allow all taxpayers to opt-in voluntarily. This expansion enables taxpayers to proactively protect their identities, even if they have not yet been victims of identity theft.
To obtain an IP-PIN, taxpayers must verify their identity through the IRS's online Get an IP-PIN tool. This process involves answering a series of questions to confirm the taxpayer's identity. If the taxpayer cannot verify their identity online, they can apply for an IP-PIN using IRS Form 15227 or by scheduling an in-person appointment at an IRS Taxpayer Assistance Center.
Benefits of Using an IP-PIN
Enhanced Security: The primary benefit of an IP-PIN is the added layer of security it provides. By requiring this unique number to file a tax return, the IRS significantly reduces the risk of fraudulent filings.
Peace of Mind: Knowing that their tax returns are protected, taxpayers can have peace of mind during tax season. This is particularly important for those who have previously experienced identity theft.
Proactive Protection: Even if a taxpayer has not been a victim of identity theft, opting into the IP-PIN program allows them to take proactive steps to protect their identity.
Annual Renewal: The annual renewal of the IP-PIN ensures that the number remains secure and effective in preventing identity theft.
Challenges and Considerations - While the IP-PIN program offers significant benefits, there are some challenges and considerations to keep in mind:
Identity Verification: The identity verification process can be challenging for some taxpayers, particularly those who do not have access to the necessary documentation or who have limited internet access.
Annual Renewal: Taxpayers must remember to obtain their new IP-PIN each year. Failure to do so can result in delays in filing their tax return.
Limited Availability: The online Get an IP-PIN tool is generally not available from mid-November through mid-January each year, which can be inconvenient for taxpayers who wish to obtain an IP-PIN during this time.
Responsibility: Taxpayers are responsible for keeping their IP-PIN secure and ensuring it is entered correctly on their tax return. An incorrect or missing IP-PIN can result in the rejection of the return.
The IRS Identity Protection PIN (IP-PIN) is a powerful tool in the fight against tax-related identity theft. By providing an additional layer of security, the IP-PIN helps ensure that only legitimate taxpayers can file returns using their SSN. With the expansion of the program to allow all taxpayers to opt-in, individuals can take proactive steps to protect their identities and gain peace of mind during tax season.
As identity theft continues to pose a significant threat, the IP-PIN program represents a critical component of the IRS's efforts to safeguard taxpayer information. By understanding the benefits and challenges of the IP-PIN, taxpayers can make informed decisions about how best to protect their identities and secure their financial futures.
Please contact this office with further questions related to the IP-PIN program.
NEVER MISS A STORY.
Sign up for our newsletters and get our articles delivered right to your inbox.
Rose Tax & Financial
Cedar Crest, New Mexico 87008
Sat: 10:00am to 2:00pm
Check the background of your financial professional on FINRA's BrokerCheck
Avantax affiliated Financial Professionals may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment Services℠, Member FINRA, SIPC, Investment Advisory services offered through Avantax Advisory ServicesSM, Insurance services offered through an Avantax affiliated insurance agency. 3200 Olympus Blvd., Suite 100, Dallas, TX 75019. 972-870-6000.
The Avantax family of companies exclusively provide financial products and services through its financial representatives. Although Avantax Wealth Management® does not provide or supervise tax or accounting services, Avantax representatives may offer these services through their independent outside business. Content, links, and some material within this website may have been created by a third party for use by an Avantax affiliated representative. This content is for educational and informational purposes only and does not represent the views and opinions of Avantax Wealth Management® or its subsidiaries. Avantax Wealth Management® is not responsible for and does not control, adopt, or endorse any content contained on any third party website.
This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. We make no representation as to the completeness or accuracy of information provided at these web sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences.
For Important Information and Form CRS please visit https://www.avantax.com/disclosures.