Taking steps to protect your identity, especially about your personal tax affairs, is vital now that fraud cases continue to rise. But unfortunately, despite the best efforts of the IRS, even if you have the best identity theft protection, it's still possible to become a victim of fraud.
If criminals get hold of your Social Security number and other personal details, they may also go after your tax refund, which is even more stressful as it could leave you out of pocket. However, if you have been unfortunate enough to become a victim of tax identity fraud, then there are additional steps you can subsequently take so that it hopefully doesn't happen again.
Central to this is the option for getting an identity protection PIN or IP PIN. These are issued by the IRS and consist of a six-digit number that will stop anyone else from filing a tax return if they've managed to get hold of your Social Security number. Obtaining one will require some effort, but this is an excellent route to take if you feel you need an extra level of protection following ID theft.
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Your eligibility
Unsurprisingly, the IRS doesn't hand out IP PINs in a haphazard fashion, so you'll need to be a confirmed victim of identity theft to qualify for one. Then, after the IRS has concluded its identity theft investigations and is happy that your tax account issues have been corrected, you'll be in line for a CP01A Notice. This is the official notice that explains what the IP PIN is and why you're being issued one.
Once you start getting an IP PIN, each one issued will last for twelve months. This means that a new one is sent out every year. Each time you get a replacement, you will receive instructions on how to use the unique 6-digit IP PIN, and this will need to be entered each time you file official forms, which include Forms 1040, 1040-SR, 1040-NR, or 1040 PR/SS.
Taking action
Each taxpayer who gets an IP PIN must use the unique ID whenever an electronic tax return is filed. According to the IRS, this includes the primary taxpayer, spouse, and dependent. Similarly, taxpayers need to enter the ID number if filing using a paper return too, and there are some valuable pointers on precisely what needs to be done on the IRS page outlining these steps.
As you’d expect for something vital in maintaining security and protecting your data, the IP PIN needs to be looked after. It should not be disclosed to anyone else, aside from a tax preparer, if you are using the services of one. Failure to use it on the official forms will also mean that your filed return will be rejected, which could result in even more stress.
Be sure to keep your CP01A notice along with any new ID PIN you get each year in a secure location, ideally along with your tax records.
Getting the IP PIN
You'll need to be a confirmed victim of identity theft to get an IP PIN. The IRS can send you one in the mail, which will be contained in a CP01A Notice. However, this is dependent on your identity theft case being resolved before the start of the next tax-filing season.
The other route to an IP PIN is if you're volunteering for the IP PIN Opt-In Program. This involves using the online Get an IP PIN tool, and you'll be required to have an account on IRS.gov. This is needed so that you can subsequently validate your identity. It's worth spending some time reading up on the secure access identity authentication processes.
There are also steps in place if you happen to lose your CP01A Notice so that you can still retrieve your IP PIN. Similarly, if you cannot get the IP PIN using the online tool, then it is possible to fill in an application or obtain in-person authentication to process a request. However, using these other methods could mean there will be a delay in receiving your IP PIN.
IP PIN usage
Once you've managed to get your IP PIN, the unique number will need to be used if you're working with tax software products for accounting and tax filing purposes. It's also imperative that the IP PIN is entered correctly because if it isn't, it could cause further issues and potential delays when sorting out tax filing tasks.
It's also crucial to ensure that the IP PIN isn't shared with anyone, aside from a tax professional whose services you might be used for tax filing. Remember that the IRS will never ask for your IP PIN, so beware of any dubious communications requesting it. Any phone call, email, or text asking you to submit your IP PIN should be ignored as they will doubtless be scams.
Although it may seem like quite a lot of effort, getting yourself an IP PIN could make life easier in the long run. If you've been a victim of personal identity theft, especially in tax affairs, this is still one of the best ways to counter criminal activity. And, because the number is renewed each year, it does make life harder for fraudsters who might have exploited your details on previous occasions.
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