Do I Need an Identity Protection PIN?

Identity theft and cybercrime have become a major problem over the past couple of decades, fueled by the rise of the internet and the many ways it can be used to part you from your personal information.  A 2019 study by Javelin Research found that 14.4 million Americans had fallen victim in 2018, with estimated losses totaling $3.4 billion.

Even worse, 23 percent of victims – almost one in four – had “unreimbursed personal expenses” as a result.  Several strategies can help you minimize the risk of joining their number, one of the best being an Identity Protection PIN (IPP).

What Is an Identity Protection PIN?

The PIN is simply a 6-digit number assigned to you personally by the Internal Revenue Service.  It adds an extra layer of security to your identity, because while your Social Security Number is used in dozens of ways your PIN is unique to you.  You’d only ever share it with your tax preparation professional, or with your spouse or domestic partner if you file jointly.

The PIN acts as a second point of confirmation for your identity.  It protects you against a scammer or fraud artist using your stolen identity to file a fraudulent return in your name.

Pros and Cons of Identity Protection PINs

The PIN is required whenever you file a 1040, 1040PR or 1040SS.  It’s not needed for any of the other forms or schedules you may need to attach in order to complete your return.  If you e-file a return without the PIN, it will be sent back to you so you can enter the PIN correctly.  If you’ve filed by paper, processing your return will take extra time because the IRS will need to follow alternative methods to verify your identification.  This means your refund, if you’re expecting one, will be delayed.

This is both the major pro and major con of having a PIN.  The upside is that without it, scammers are shut out from many of the common types of tax-related fraud, reducing the impact of identity theft.  The downside to this added layer of security is that it can be a real inconvenience.  Once the PIN has been issued it’s impossible to file a return without it, and your participation in the program is permanent. You’ll need to continue using it every year.

That raises a second point that’s worth knowing: your PIN will change every year, so it’s not a simple question of memorizing the number.  Again, this is a direct trade-off between security and convenience.  You’ll need to keep track of your own PIN, but it protects you against a potentially significant financial loss.

Do I Need an Identity Protection PIN?

If you’ve already been the victim of identity theft, the IRS will send you a CP01A notice after your case is resolved.  This means you’ve already been assigned a PIN, which will be included on the notice.

If you have not yet been the victim of identity theft but are concerned about the possibility, you might want to apply for an PIN.  Not everyone is eligible at this time, though the PIN will eventually be available nation-wide.  Currently residents of 20 states can choose to opt-in to the program (the complete list is available on the program’s FAQ page), or you may receive a direct invitation from the IRS to participate in the program.

How to Put a PIN on Your Social Security Number

Getting an Identity Protection PIN is a lengthy but not especially complicated process if you’re eligible.  You’ll need to go to the IRS’ online “Get an IP PIN” tool, and create an account.  You’ll need to have a laundry list of personally identifying information at your fingertips to satisfy the agency’s identity verification requirements (if they weren’t stringent, it would just be one more avenue for scammers).  Once you’ve completed the application, an access code will be mailed to your address or sent to a phone that’s linked to your name.

Once you have that code, you can complete the actual application for a PIN.  In due course, a CP01A containing your PIN will be mailed to you.  If you misplace your form before tax season, you can use the same online tool to retrieve your current-year PIN so you can complete your taxes.

The Bottom Line on an IP PIN

At the end of the day, no single protective step insulates you completely from identity theft and the various kinds of fraud that come with it.  You’ll still need to take a number of common-sense precautions to minimize the risk of criminals misusing your personal information.

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