May 8, 2024
In recent years, identity theft has emerged as a pressing concern across the United States, with tax-related identity theft representing a significant portion of these crimes. In 2022 alone, the Federal Trade Commission received over 1.1 million reports of identity theft, reflecting the growing sophistication of fraudsters and the increasing vulnerability of personal information in the digital age. Tax-related identity theft, a particularly insidious form of this crime, involves unauthorized individuals using someone else’s personal information to file fraudulent tax returns, aiming to claim refunds illicitly. Recognizing this, the Internal Revenue Service (IRS) has implemented robust measures to safeguard taxpayers, among which the Identity Protection Personal Identification Number (IP PIN) stands out as a cornerstone.
The Identity Protection PIN (IP PIN) Program is a protective measure designed by the Internal Revenue Service (IRS) to combat tax-related identity theft. An IP PIN is a six-digit number assigned to taxpayers who opt into the program or have been identified as victims of identity theft. This unique number is used to verify the identity of the taxpayer when filing federal income tax returns, thereby preventing unauthorized individuals from filing fraudulent tax returns using someone else's Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
Online Application: Taxpayers can apply for an IP PIN through the IRS's "Get an IP PIN" online tool. This method is the fastest way to receive an IP PIN but requires going through a rigorous identity verification process.
In-Person Application: For those unable or unwilling to use the online option, visiting a Taxpayer Assistance Center (TAC) in person and providing identification is another way to obtain an IP PIN. An appointment is required for this method.
Mail Application: Taxpayers can also apply by mailing Form 15227, Application for an Identity Protection Personal Identification Number, to the IRS if they have an adjusted gross income of $72,000 or less. However, this method is subject to longer processing times.
The IP PIN is valid for one tax year. The IRS issues a new IP PIN annually through the CP01A notice, sent via mail from mid-December through early January. Taxpayers who obtained their IP PIN online need to retrieve their new IP PIN each year through the IRS website before filing their tax returns.
The IRS's Identity Protection PIN (IP PIN) program extends beyond just the primary taxpayer, offering protection for spouses and dependents as well.
Spouses:
Spouses are eligible to obtain an IP PIN if they meet the IRS's criteria for enrollment in the IP PIN program. This includes being a victim of identity theft or opting in to receive an IP PIN as a proactive measure against potential tax-related identity theft. Each spouse must separately apply for an IP PIN to be used alongside their Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) on joint or separate tax returns.
Dependents:
Dependents, regardless of age, are also eligible for an IP PIN if they have a valid SSN or ITIN. This is particularly important for protecting minors, who may be especially vulnerable to identity theft. Parents or guardians can apply for an IP PIN on behalf of their dependents to ensure their information is safeguarded when included on the family’s tax return.
Individual Tax Returns:
Each taxpayer who has received an IP PIN must include it on their individual tax return. This applies whether filing jointly or separately. The IP PIN serves as a critical layer of authentication, verifying to the IRS that the tax return is legitimate and has not been filed fraudulently using stolen personal information.
Joint Tax Returns:
On joint tax returns, if both spouses have received an IP PIN, each must include their unique IP PIN with their respective SSN or ITIN. It's important to carefully follow the instructions on the tax return form to ensure both IP PINs are correctly entered, as this helps prevent processing delays and potential fraud.
Dependents:
When a dependent has been issued an IP PIN, it must be included on any tax return where the dependent's information is reported. This includes returns claiming child and dependent care expenses, earned income credit, or any other tax benefit related to the dependent. The inclusion of the dependent’s IP PIN adds an additional verification step, ensuring that the dependent’s information is being used appropriately and with authorization.
The IRS has acknowledged an increase in processing times for IP PIN applications submitted through Form 15227. This form is mailed to the IRS by taxpayers seeking an IP PIN, a crucial step for those who have experienced tax-related identity theft or who wish to proactively protect their tax accounts. However, recent trends have shown that processing these applications can significantly exceed the IRS's targeted timeframe, with many taxpayers experiencing delays longer than the expected 120 days.
- Increased Anxiety: Waiting for an IP PIN can be stressful, particularly for those who have already been victims of identity theft and are anxious to secure their tax accounts.
- Filing Delays: Taxpayers may need to postpone filing their tax returns until they receive their IP PIN, potentially affecting their ability to meet the tax filing deadline.
- Risk of Fraud: The longer a taxpayer waits for an IP PIN, the greater the window of opportunity for identity thieves to misuse their personal information.
- Electronic Form 15227: Introducing a fillable, electronic version of Form 15227 could significantly cut down on processing times by eliminating the need for manual data entry and allowing for faster, more efficient processing.
- Increased Awareness and Use of Online Options: Encouraging more taxpayers to use the online application method through enhanced outreach and education could reduce the volume of paper applications.
- Resource Allocation: Allocating more resources, both financial and human, to the processing of IP PIN applications during peak periods could help manage the workload more effectively.
When you file your federal income tax returns, including your IP PIN is non-negotiable. This six-digit number is a signal to the IRS that the tax return being submitted is indeed from the genuine taxpayer, not an identity thief. If you omit the IP PIN from your tax return, the IRS will flag this omission. For electronically filed returns, this means an immediate rejection. If you file a paper return without your IP PIN, expect significant processing delays. Essentially, the absence of an IP PIN on a return is a red flag that can grind the acceptance and processing of your tax documents to a halt.
- Online Retrieval: The quickest way to recover a lost or unreceived IP PIN is through the IRS's Get an IP PIN tool available on their official website. To use this service, you will need to sign in or create an IRS account. The process includes steps to verify your identity to ensure your IP PIN can be securely retrieved.
- Telephone Assistance: If you're unable to use the online option or prefer speaking to a representative, you can call the IRS's Identity Protection Specialized Unit. This method might require patience, especially during peak times, but it offers a direct line to assistance.
- Paper Filing Without an IP PIN: As a last resort, if you're unable to retrieve your IP PIN in time for filing, you can submit your tax return by paper without the IP PIN. Be prepared for a longer processing time, as the IRS will need to take additional steps to verify your identity and ensure the legitimacy of your return.
Increasing Awareness through Education: The IRS can ramp up its educational efforts by providing clear, accessible information about the IP PIN program through various channels. This could include social media campaigns, informational videos, webinars, and partnerships with influencers or public figures to broaden the program's visibility.
Targeted Communications: Tailoring communications to specific demographics that may be more vulnerable to identity theft, such as the elderly or recent victims of identity theft, can help ensure that the people who most need an IP PIN are aware of how to obtain one. Additionally, the IRS could leverage tax preparers and financial advisors by providing them with resources to educate their clients about the benefits of the IP PIN.
Utilizing Taxpayer Communications: Every interaction with taxpayers, from letters to emails, offers an opportunity to inform them about the IP PIN program. Including reminders and instructions for obtaining an IP PIN in these communications could significantly increase program participation.
Partnership with Financial Institutions: Banks and credit unions play a critical role in identifying and responding to identity theft. The IRS can collaborate with these institutions to inform customers about the IP PIN program at the moment they are dealing with identity theft or fraud. This timely information can be crucial in preventing further misuse of their information.
Engaging with State Tax Authorities: State tax agencies also deal with tax-related identity theft and could be valuable partners in promoting the IP PIN program. Joint initiatives, such as shared educational resources or co-hosted informational sessions, can extend the reach of the program's benefits.
Collaboration with Law Enforcement: Often, local law enforcement agencies are among the first to be notified when identity theft occurs. Providing these agencies with resources and information about the IP PIN program can help them offer immediate assistance and guidance to victims.
Working with Educational Institutions: Schools and universities are hubs of personal information and, unfortunately, potential identity theft. Educating students, especially those entering the workforce, about protecting their identity and the tools available, such as the IP PIN, can instill good practices early on.
Leveraging Technology Platforms: Partnering with technology companies, especially those specializing in security and identity protection, could offer innovative ways to promote the IP PIN program. These partnerships could lead to the development of new tools or applications that make obtaining an IP PIN easier and more integrated into the digital lives of taxpayers.
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