The IRS is continuously battling identity theft and tax return fraud. As part of an initiative from the Security Summit, an effort between the IRS, state tax agencies, and tax communities, the IRS has announced that a solution created to stop identity theft is now being offered to all taxpayers: the Identity Protection PIN (IP PIN) Program.
IP PINs were originally only available to identity theft victims. Starting in January 2021, they’ll be available to any taxpayer who can verify their identity.
What is the IRS Identity Protection PIN Program?
To help safeguard against identity theft, the IRS is allowing taxpayers to opt-in to their Identity Protection PIN program. This program allows taxpayers to use a six-digit number when filing their tax return, rather than using their social security number. When a taxpayer uses an IP PIN for tax return filing, no one else can file a tax return using their social security number, helping to prevent identity theft and fraudulent tax return filings.
The IP PIN is only valid for one year — a taxpayer will need to re-request a new IP PIN each January. The IRS does plan to offer an opt-out option in 2022 for any taxpayer who does not wish to continue using IP PIN.
Advantages of the Identity Protection PIN Program
- Proactively protect against identity theft: Using an IP PIN will stop someone from fraudulently filing a tax return using your social security number.
- Opt-Out Option: If you don’t enjoy using IP PIN, you are not required to use it every year going forward. You can request to opt-out of the program in 2022 when the IRS makes that option available.
Drawbacks of the Identity Protection PIN Program
- Rigorous Authentication Process: If you don’t have the right information available to help authenticate your identity, registering may be challenging. There are alternative options available, but the IRS takes identity protection seriously and it will take time to sign up.
- Once You Receive an IP PIN, You Must Use It: If you successfully apply for an IP PIN, you’ll need to follow-through using it when filing your tax return. If your IP PIN is not used or entered correctly on your tax return, you risk having your tax return rejected or delayed.
How to Sign Up for the Identity Protection PIN
There are a few different options to file for an IP PIN:
- Online IP PIN Tool: If you have the right documents available, you can apply for an IP PIN online with the IRS’s IP PIN tool. This is the fastest way to receive your PIN. It’s immediately displayed online. You will first need to pass Secure Access authentication to verify your identity, which requires a number of different pieces of information. We recommend reviewing the documentation before starting the application process.
- Form 15227: If you have taxable income of less than $72,000 you can complete and submit Form 15227 to the IRS via mail or fax. They will then call you to ask questions and confirm your identity. If your identity is verified, you will receive an IP PIN for the following year.
- Taxpayer Assistance Center: If neither option is available to you, you can make an appointment at a Taxpayer Assistance Center to have your identity verified in person. You will need two forms of identification. Once your identity is verified, you will receive your IP PIN in the mail within three weeks.
Aldrich is Here to Help
Identity theft and fraud can have devastating consequences. We recommend participating in the IP PIN program to safeguard your financials and prevent future complications. As a reminder, only share your IP PIN with your tax preparer, and the IRS will never call to verify your IP PIN. If you need assistance understanding this new program, or anything applying for your PIN, contact your Aldrich Advisor for support.
Meet the Author
Matthew Kanter, CPA, CFP®
Aldrich CPAs + Advisors LLP
Matthew Kanter joined the firm in 2017 with five years of experience working with individuals and small businesses at a small accounting firm in the Portland, Oregon area. Here at Aldrich, Matthew assists with tax compliance and planning for individuals, high net-worth clients, and estates and trusts. Matthew enjoys empowering his clients to focus on... Read more Matthew Kanter, CPA, CFP®
- Certified Public Accountant
- High-net-worth individuals
- Strategic tax planning and compliance