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Stop tax ID theft by applying for special IRS ID number

IP PIN area on Form 1040

Most of us agree that technology has enhanced our lives. It's simplified myriad daily tasks with just a voice command, touch of a device screen or stroke of a keyboard.

It's also made things easier for crooks. Identity theft is a snap when criminals can electronically snag your personal and financial data.

High tech's illicit aspects quickly spread to the tax world. When the Internal Revenue Service shifted to electronic transactions, tax identity thieves slipped through that digital door, stealing taxpayer identities and filing fake returns to collect fraudulent refunds.

Now, though, the IRS is adding an extra electronic lock to that technological entryway.

The federal tax agency is giving every taxpayer nationwide the option to get an Identity Protection Personal Identification Number (IP PIN).

This move, announced today as part of the IRS' and its Security Summit partners' Fifth Annual National Tax Security Awareness Week, allows individuals to be proactive in fighting tax identity theft.

It's value in helping stop ID theft on Form 1040 also earns this expanded IP PIN option a place, albeit on Wednesday, on the Tax Form Tuesday list.

IP PIN proves taxpayer identity: The IRS created the IP PIN program to help it determine which filing is real when both legitimate taxpayers and the thieves who stolen their identities both file returns.

Your official six-digit IP PIN, which you enter on your Form 1040, helps the IRS confirm your filing is the true one.

An e-filed return without the correct IP PIN will be rejected. In the case of paper filings, one lacking the proper IP PIN will get extra scrutiny.

IP PIN evolution: When the IRS started issuing IP PINs, it was a way to deal with filings after a false return had been submitted.

But IRS realized that prevention is more effective, for both the agency and taxpayers, than cleaning up after a false return is filed.

So in 2010, the IRS initiated a pilot program that gave IP PINs to a select group of taxpayers who weren't identity theft victims, but who wanted the extra security of using a special identifying number to file their returns.

The first group of optional IP PINs went to folks in Washington, D.C., Florida and Georgia, locations that had high levels of identity theft reports. The preemptive IP PIN program has since been expanded, most recently last October when the numbers were made available to residents in a total of 19 states and the nation's capital.

Come January 2021, this IP PIN opt-in program will be expanded to all taxpayers who can properly verify their identities. The IRS says the online application tool should be operational by the middle of next month.

Who should get added tax security? If you're someone who tends to file later in the filing season, getting an IP PIN is probably a good idea.

Tax crooks try to get their fake filings in early, so they can claim refunds under others' names first. The real filer (and sometimes the IRS, too) doesn't realize a fraudulent return has been filed until weeks or months later when the real taxpayer finally sends in his or her Form 1040.

But when a taxpayer gets an IP PIN, the tax crime is short-circuited. As noted earlier, the form without the security digits associated with your Social Security number is rejected.

IRS IP PIN guards against tax identity theft

"When you have this special code, it prevents someone else from filing a tax return with your Social Security number," said IRS Commissioner Chuck Rettig in announcing the program's national expansion next filing season.

Getting an IP PIN: The commissioner also noted that to obtain an IP PIN, taxpayers must pass a rigorous authentication process. "We must know that the person asking for the IP PIN is the legitimate taxpayer," said Rettig.

You can obtain an IP PIN by using the IRS' online application tool. It utilizes Secure Access authentication, which uses several different ways to verify a person's identity.

Before using the Get an IP PIN online tool, you should review the requirements at the IRS special web page detailing the Secure Access process.

Of particular note is the information you need to have handy before starting. It includes:

  • Email address
  • Social Security Number (SSN) or Individual Tax Identification Number (ITIN)
  • Tax filing status and mailing address
  • Mobile phone linked to your name (for faster registration) or ability to receive an activation code by mail.

You'll also have to provide one financial account number linked to your name. Any one of the following is acceptable.

  • Credit card information. You'll need to enter the last 8 digits. You cannot use an American Express card, a corporate card or a debit card.
  • Student loan information. You must enter the student loan account number provided on your statement. The account number may contain both numbers and letters. Do not include any symbols. However, the IRS says it can't verify student loans issued by Nelnet. or
  • Mortgage or home equity loan info.
  • Home equity line of credit (HELOC) data.
  • Auto loan information.

Phone, in-person options, too: If you cannot meet Secure Access authentication requirements, there are alternatives. Taxpayers with incomes of $72,000 or less and with access to a telephone should complete Form 15227 and mail or fax it to the IRS. An IRS assistor will call the taxpayer to verify their identity with a series of questions. For additional security reasons, taxpayers who pass authentication will receive an IP PIN the following tax year.

Taxpayers who cannot verify their identities remotely or who are ineligible to file a Form 15227 may apply in person. You need to make an appointment to visit your nearest Taxpayer Assistance Center and bring two forms of picture identification.

With an in-person identity verification meeting, your IP PIN will be mailed to you within three weeks.

A few more IP PIN points: Taxpayers with either a Social Security number or Individual Tax Identification Number who can verify their identities are eligible for the opt-in program.

Any primary taxpayer (listed first on the return), secondary taxpayer (listed second on the return, such as a spouse on a married filing jointly return) or a dependent may obtain an IP PIN if they can pass the identity proofing requirements.

Also note that an IP PIN is not permanent. It is valid for only one year. The IRS will automatically send you a new IP PIN the next year before the tax season starts.

And if you get an IP PIN in 2021 but find it's not for you, the IRS says it plans to offer an opt-out feature in 2022.

You can find more on the IP PIN application process in IRS Publication 5367.

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