Don't Mess With Taxes

If you want more security for your tax return, the Internal Revenue Service has a deal for you.

Every taxpayer now can apply for an Identity Protection Personal Identity Number, or IP PIN.

An IP PIN lets the IRS verify that it is indeed you who has filed your tax return. Once you have the six-digit code, the agency won't accept an electronically filed return in your name without it. If a paper return shows up without the IP PIN, it will get added IRS scrutiny.

"This is a way to, in essence, lock your tax account, and the IP PIN serves as the key to opening that account," said IRS Commissioner Chuck Rettig in announcing the opening of the expanded IP PIN program.

Slow but steady expansion: The IRS revealed its plans to open voluntary participation to all in the IP PIN program during last year's Security Summit. The goal is to further fight tax identity theft and fraudulent tax filings.

The cyber security concept started 11 years ago when the IRS allowed a small group of taxpayers in Florida, Georgia and Washington, D.C. to get the numbers. They weren't identity theft victims, but who wanted extra filing security to use special identifying numbers to file their returns because the electronic crime was so prevalent in those areas.

From that start, the optional IP PIN expanded. Before the new open-for-all move, the numeric security option was broadened in October 2019 when it was made available to residents in a total of 19 states and the nation's capital.

Now anyone can opt in to the IP PIN program.

Why get one? If you've ever had to deal with ID theft, you know how it can screw up your life. I know, but thankfully in only a minor way.

A few years ago, I had someone pretend to be me to get a cell phone account. I was lucky. That account was all that fake Kay Bell in Houston did. But because she didn't pay her phone bill, it showed up on my credit reports.

It took me months to prove that while I was a Texan, I never lived in H-Town and was in fact in another state when my identity was used for nefarious reasons. And yes, I didn't learn about it until the hubby and I applied for our current home loan. Now we check our credit accounts every year.

The same issues arise with tax identity theft. In these cases, though, the crooks pretend to be you to file a fake return and claim a fraudulent, inflated refund.

Tax crooks also tend to try to beat legitimate taxpayers to the punch. They file early in the hopes of getting their ill-gotten tax money before you submit your real Form 1040. Only when you do send in your return, you (and the IRS) discover the fake one, like me learning of the faux phone account when I wanted to borrow money.

If you're someone who tends to file later in the filing season, either because you must wait for the necessary tax documents or you just procrastinate (no judging!), you might want to get an IP PIN. It could stop the early-bird cyber crooks.

Preparing for an IP PIN: Of course, since the goal of the digital security option is, well, increased security for filers, you'll need to prepare before you apply.

Here are some key things the IRS says all of us interested in an IP PIN need to know about the process:

• It is a voluntary program.
• There is no cost.
• You must pass a rigorous identity verification process.
• Spouses and dependents are eligible for an IP PIN if they can verify their identities.
• An IP PIN is valid for a calendar year.
• An IP PIN is used only on Forms 1040, 1040-PR and 1040-SS.
• You must obtain a new IP PIN each filing season.
• Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays.

The opening of the online IP PIN tool to everyone this Jan. 12 is consistent with the program's long-standing regular operation. It is offline between November and mid-January each year.

The IRS also emphasizes that once you get your IP PIN, never share it with anyone but your trusted tax provider. Of, if your spouse is like the hubby, with your spouse (me in our household) who does your taxes.

Remember, too, that the IRS will never call, text or email you to ask for your IP PIN. If you get one of those contacts, it's a scam.

Online IP PIN application: OK, you've decided you want an IP PIN for the 2021 filing season. The quickest way to get one is to go to IRS.gov/IPPIN and use the agency's Get an IP PIN tool.

This online process will require taxpayers to verify their identities using the Secure Access authentication process if they do not already have an IRS account. The IRS' Secure Access Web page has the information you need to be successful.

Here are the highlights of the information you need to have handy to apply:

• Email address
• Social Security Number or Individual Tax Identification Number (ITIN)
• Tax filing status and mailing address
• One financial account number linked to your name. This could be a one of the following:
• Credit card — You'll need the last 8 digits, but the IP PIN tool does not accept American Express, debit or corporate credit cards
• Student loan — 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, says the IRS, it cannot verify student loans issued by Nelnet.
• Mortgage or home equity loan
• Home equity line of credit (HELOC)
• Auto loan

For faster registration, you'll also need a mobile phone linked to your name. An activation code will be sent to that device.

If you don't have a phone in your name — say, for example, you're on a plan that lists only the account-opening family member — they you'll have to wait for the IP PIN activation code to be sent to you by U.S. Postal Service mail.

After you've authenticated your identity, you'll immediately get your IP PIN. And once in the program, this PIN must be used when prompted by electronic tax returns or entered by hand near the signature line on paper tax returns.

Other application avenues: Taxpayers whose adjusted gross income is $72,000 or less may complete Form 15227, Application for an Identity Protection Personal Identification Number, and mail or fax the form to the IRS. That information is on the form.

An IRS customer service representative will contact Form 15227 filers to verify their identities by phone. Taxpayers should have their prior year tax return at hand for the verification process.

The bad news is that this won't do you any good this filing season. For security reasons, taxpayers who verify their identities through this process will have an IP PIN mailed to them the following tax year.

If you can't verify your identity by phone or not eligible to use Form 15227, you can make an appointment at an IRS Taxpayer Assistance Center to verify your identity in person. In this case, bring two forms of identification, including one government-issued picture identification.

Taxpayers who verify their identities through the in-person process will have an IP PIN mailed to them within three weeks. Once in the program, the IP PIN will be mailed to these taxpayers each year.

Easy to opt in, not easy (yet) to opt out: You went to the trouble to get an IP PIN, but now have decided you don't want to use it. Too bad. Right now, there is no way to opt out.

You must include it on your e-filed return or your 1040 won't be processed if you file electronically.

Also, your number will change each year, with this IRS sending it to you via mail. That's another reason to keep Uncle Sam's tax collector apprised of your new address using Form 8822.  

However, the IRS says it's working on an IP PIN opt-out option for 2022 for those who have second thoughts about being in the program.

If an IP PIN appeals to you, check out the IRS' frequently asked questions on the program. Or the IP PIN video below.

Then click on over to Get an IP PIN tool.

You also might find these items of interest:

• IRS allows more truncated tax ID numbers
• Tax software in 2021 filing season to offer multi-factor identity protection
• Identity and tax thieves don't discriminate by age, targeting both youngsters and the elderly

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