10 Oct What’s an IP PIN and How Can It Protect You from Tax Fraud?
Every year, hundreds of taxpayers fall victim to tax fraud. Scammers file false returns using your name and Social Security number, and collect refunds from the federal and state governments. The IRS has taken additional steps every year, trying to educate taxpayers and help them protect themselves from these scams.
This year, they’ve expanded one of the most effective programs for preventing tax frauds—the Identity Protection Personal Identification Number, or IP PIN. Here’s what you need to know about IP PINs and how they protect you from tax fraud.
What Is an IP PIN?
An IP PIN is an IRS-assigned identification number used to verify your identity when filing your tax return. IP PINs were initially used for victims of tax fraud to prove that their filed return was the correct one. However, in 2010, the IRS began using it as a preventative measure by assigning IP PINs to a select few taxpayers who were not yet victims of fraud. At first, these were only available to taxpayers in Washington, D.C., Florida, and Georgia—areas with the highest rates of tax fraud.
During the 2019 tax season, the IRS expanded the program to make IP PINs available to taxpayers in California, Delaware, Illinois, Maryland, Michigan, Nevada, and Rhode Island—again, states with some of the highest reported rates of tax fraud. Now, they’re expanding the program to include Arizona, Colorado, Connecticut, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Texas, and Washington for the 2020 tax filing season.
How to Get an IP PIN
The IP PIN program is an opt-in program, so you will not automatically be assigned one, even if you live in one of the participating states. To receive your own IP PIN you must:
- Have received a CP01A Notice from the agency containing your IP PIN,
- Have filed last year’s return as a resident of one of the currently participating jurisdictions, or
- Have received a letter from the IRS inviting you to opt in.
If any of the above is true, you can apply for your IP PIN on the IRS’s Get An Identity Protection PIN page.
How Does It Work?
Once you opt in for your IP PIN, you’ll receive a six-digit identification number from the IRS. You simply need to put this number on your tax return to verify your identity. Additionally, once you’ve opted in, an e-filed tax return that does not include the proper IP PIN will be rejected; and, any paper returns filed without an IP PIN will be given extra scrutiny. This significantly reduces the likelihood of a false return being filed in your name.
Your IP PIN will only be good for one year, and you’ll receive a new one automatically each year; you only have to opt in once. This makes it extremely difficult for tax scammers to steal the IP PIN and use it to file a fraudulent return.
Who Should Get an IP PIN?
If you’re eligible for an IP PIN, there’s really no reason not to get one. It’s an added level of security that can protect you and save you a lot of headaches. But if you’ve had your personal information stolen in any recent data breaches, we strongly recommend that you get an IP PIN.
Additionally, you should consider getting an IP PIN if you tend to wait to file your return. As mentioned above, tax scammers try to file false returns early on, so that they get their fraudulent paperwork to the IRS before your real return. This makes those who delay filing more likely to fall victim to a tax scam.
If you’re interested in receiving an IP PIN for extra protection against tax scams, use the link above to opt in, or speak to one of our Provo tax professionals to learn more.