Tax frauds relating to false refund claims, and identity thefts have been a severe problem for the U.S. Internal Revenue Services (IRS). The IRS has taken several identity theft preventive measures from verification based on Adjusted Gross Income (AGI) confirmation to the latest IP PIN (Identity Protection PIN).
Many U.S. taxpayers are still not well aware of the IRS IP PIN, which is an important tax identification measure taken by the IRS. The following summarizes who is eligible for the IP PIN and how to obtain one.
U.S. Taxpayers’ Identity Protection (IP) PIN
The U.S. Identity Protection (IP) PIN is a six-digit number given to qualifying U.S. taxpayers to help prevent misuse of their Social Security number (SSN) on fraudulent federal U.S. income tax returns and claim tax refunds filed by identity thieves.
How Can A U.S. Taxpayer Obtain An IP PIN To File Their Tax Return
The U.S. taxpayer needs to qualify for an IP PIN
To confirm if a taxpayer qualifies for an IP PIN, he/she needs to visit the ‘Get An Identity Protection PIN (IP PIN)’ on the IRS website. This process will require the taxpayer to provide their Social Security Number (SSN), filing status, and mailing address as per their most-recently filed U.S. federal income tax return.
Along with these details, taxpayers will need access to an email account, credit card number or account number from a car loan, mortgage, home equity loan or home equity line of credit, and mobile phone with name on the account.
Who Qualifies for IP PIN
There are two groups of taxpayers that qualify for IP PIN. The first group is required to obtain the number while the second group may opt in.
You are REQUIRED TO GET an IP PIN to file your current or prior year tax returns in 2017 if:
- You received a CP01A Notice with your new IP PIN and you lost it, or
- You had an IP PIN before and you didn’t receive a new one, or
- IRS rejected your e-file return because your IP PIN was missing or incorrect
You MAY CHOOSE to get an IP PIN if:
- You receive an IRS letter inviting you to ‘opt-in’ to get an IP PIN; or
- You filed your last federal tax return with an address in Florida, Georgia or the District of Columbia.
IP PIN Application Process
Once, the verification process is complete, the taxpayer may then proceed with applying for the Identity Protection (IP) PIN through the online IP PIN application. Once, the IRS verifies the application they will send the IP PIN as a ‘CP01A Notice’ via the U.S. postal service. A new IP PIN is issued every December.
Losing An IP PIN
If the CP01A Notice containing the IP PIN is lost, it can be retrieved by using the same “Get An Identity Protection PIN (IP PIN)” option on the IRS website. This option is also usable if the taxpayer did not receive the CP01A notice containing the IP PIN in December.
Using The IP PIN
Once the taxpayer opts for an ‘IP PIN’, he/she should use it every year to file their U.S. federal income tax return. Also, if a taxpayer has agreed to the IP PIN method of identification for filing their tax return, he/she cannot file their return without this IP PIN. If a taxpayer files his/her return without the IP PIN, e-filing or paper, the filed tax return would possibly be rejected.
The IP PIN process was basically introduced to prevent tax scammers from reusing the personal information of victimized taxpayers to file fraudulent returns in order to claim refunds.
Last year, the scammers were successful in obtaining the IP PIN of approximately 800 taxpayers. The IRS is trying it’s best to prevent these tax identity thefts but these scammers are equally proficient, making it difficult to come up with concrete measures. Therefore, it is highly recommended that taxpayers exercise the following measures to avoid falling prey to identity thieves:
- Avoid disclosing any tax-related information unnecessarily.
- Verify the IRS website. It should end with ‘.gov’ not ‘.com’ ‘.us’, or ‘.net’ or any other extension.
- Do not divulge information over the phone to someone pretending to be an IRS agent.
- Use a safe secure server to file tax returns. Do not use Wi-Fi service provided at public spaces to file returns or carry out activities that involve disclosing confidential personal information.
You may refer to our other articles on various IRS-related tax scams, and always remember being cautious can help minimize exposure to tax identity theft.
AG TAX LLP CAN HELP
If you have any other tax-related queries, and/or need assistance with tax planning/filing please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian tax laws and can provide you the right guidance to handle your tax situation.
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canada and other international tax laws.
We can assist with:
- Canadian Personal and corporate tax returns
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To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
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Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
