Expansion of Identity Protection PIN Program For All Taxpayers

There is no secret that the IRS has been battling identity theft for years. Bad actors have been obtaining social security numbers and filing false returns on behalf of taxpayers for years now. Identity theft remains one of the single biggest problems the IRS confronts.

The IRS has announced an expansion of the Identity Protection PIN Program (“IP PIN”).  Prior to 2021, only confirmed victims of identity theft were eligible for an IP PIN.  Now the IRS Identity Protection program will be expanded to all taxpayers who properly verify their identities through its website (https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin) where taxpayers can obtain their IP PIN. .  When the taxpayer files their return the PIN is required to confirm their identity.  According to the IRS announcement  “The tool, which will be available in mid-January, uses Secure Access authentication, which verifies a person’s identity through several different methods. Once received, an IP PIN is valid for one year. Each January, the taxpayer must obtain a newly generated IP PIN. The IRS plans to offer an opt-out feature to the IP PIN program in 2022 if taxpayers find it is not right for them.”

This is a welcome change and we encourage our friends and clients to take advantage of the opportunity to be proactive and creating their PINs.  A note of caution – do not lose the PIN once it is assigned to you or you will not be able to file your return electronically, causing you to have to paper file. The processing of the return will then require an extended period while the IRS attempts to verify your identity.

Taxpayers who advise the IRS that they have been the victim of identity theft will receive an annual notice with their IP PIN, they need take no action in response to that notice.  An additional word of caution, should you move, be sure to alert the IRS of your change of address as the paper notice cannot be forwarded with the rest of your mail.

As cyber security and identity theft continue to be a main concern for all individuals and businesses, this creates an opportunity to protect your identity.

Author: Conor Barnes, CPA, Tax Manager | cbarnes@withum.com