Tax scams claim more and more victims each year, forcing taxpayers to deal with the headaches of rectifying fraudulent tax returns filed in their names. Every year, the IRS pushes to educate and protect taxpayers from these scams, typically focusing on helping taxpayers to recognize the signs of a scam so that they can avoid becoming another victim.
But there is one program that takes more direct action against these scams, and the IRS is expanding it this year, making it available in 19 states and Washington, D.C. That program is the Identity Protection Personal Identification Number, or IP PIN, program. Here’s how you can get an IP PIN, and how these six-digit numbers can protect you from tax scams.
What Are They?
IP PINs got their start over a decade ago, when the IRS issued them solely to individuals who had already fallen victim to a tax scam. The victims were given IP PINs, a six-digit number to put on their returns so that the IRS could verify which filed return was the correct one. But, of course, an ounce of prevention is worth a pound of cure. And so, the IRS soon began issuing IP PINs to taxpayers as a preventive measure.
The first IP PINs were issued in 2010 to taxpayers in Florida, Georgia, and Washington, D.C., which have the highest rates of identity theft in the country. It was nearly a decade later when the IRS expanded the IP PIN program, making it available to taxpayers in California, Delaware, Illinois, Maryland, Michigan, Nevada, and Rhode Island. And now, they’re expanding it yet again, allowing residents of Arizona, Colorado, Connecticut, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Texas, and Washington to opt in for the 2020 tax season.
How Do They Protect You?
So, how do these six-digit numbers protect you from tax fraud? Simply put, an IP PIN acts as an alternate form of identification when filing your tax return—one that is not available anywhere else and, therefore, much more difficult for identity thieves and scam artists to steal. Additionally, IP PINs only last one year and, just as updating your passwords regularly reduces the odds of your accounts being hacked, these regular changes keep your IP PIN safe from scammers.
How Do You Get One?
Now that you have a basic understanding of IP PINs and how they work, you’re probably wondering how you get one. First, it’s important to be aware that you will not be automatically assigned an IP PIN. This is an optional program being offered by the IRS to help protect taxpayers. If you want to receive an IP PIN, you must opt in. To be eligible for an IP PIN, you must meet at least one of the following criteria:
- You filed your return as a resident in one of the currently participating states (see above),
- You received a CP01A Notice containing your IP PIN from the agency, or
- You received a letter inviting you to opt in to the program.
If at least one of the above is true, all you need to do to opt in is to visit the Get An Identity Protection PIN page on the IRS website. Or, you can speak to your CPA in Provo and ask if they can do this for you. Once you opt in, you’ll receive a new IP PIN every year to file your taxes.
Who Needs One?
While you could very well go on with your life and your taxes without an IP PIN, they provide an extra level of protection that you should certainly claim if you’re eligible. However, it’s especially important for individuals who have had information stolen in any data breaches, and for those that typically wait to file their returns.
Tax scammers typically file their fraudulent returns early on in the tax season, sneaking their paperwork in before you can file. However, if you opt in for an IP PIN, no e-filed return will be accepted without the correct six-digit number, and any paper-filed returns will be given extra scrutiny if the IP PIN is not included.
If you would like to opt in for an IP PIN, use the link above, or contact us to speak to a CPA in Provo for more information.