Home Advice & How-ToIdentity IP PINs: How Do They Work, and Do You Need One?
Home Advice & How-ToIdentity IP PINs: How Do They Work, and Do You Need One?

IP PINs: How Do They Work, and Do You Need One?

by Spokeo
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Fraud and identity theft are persistent problems that can upend your life. From ATM tap scams to driver’s license theft, having someone impersonate you in order to take your money, take others’ money, and commit fraud can be devastating and expensive. One form of fraud that’s particularly painful is tax return identity theft, where scammers impersonate you to get refund money from the IRS. The IRS has tried to combat this by creating the Identity Protection PIN program and by looking more closely for potential fraud.

This ongoing effort has led to more people being flagged for fraud; while a majority are eventually cleared, many taxpayers find that they’ve become a victim of this type of theft, and the numbers have been increasing. For example, the IRS flagged 50% more returns as potentially fraudulent in 2020 than it did in 2019. For people who’ve had to deal with this fraud or who want protection from it, joining the IP PIN program is a welcome step.

What Is an IRS IP PIN?

An IRS Identity Protection PIN is literally a PIN number that you use to identify yourself when contacting the IRS. In order to get this PIN, you have to go through a verification process so that the IRS knows that you are actually you. The IRS then issues the PIN to you, and you get a new one every year. Anyone who tries to contact the IRS to get access to your account or file a return using your Social Security Number needs to present the current PIN number; without it, they’re locked out.

Identity theft can be lucrative for the thieves, but you’d think that targeting the IRS would be overly complicated and thus not something the thieves would attempt. That’s not the case. Fraudsters and ID thieves know that many people wait until later in the year to file taxes, leaving a relatively large window of opportunity for someone who’s gotten hold of another Social Security number to file a fake return. All they have to do is file under your correct name and Social Security Number, configure the fake return to result in a refund, and present a working bank account number for the refund deposit.

You may think successfully filing under someone else’s number would be difficult because surely there would be clues that the filed return was wildly off from what your employer had reported, if you even had one. However, while the IRS has technology that allows it to spot mismatches, that technology doesn’t work immediately. The IRS automated underreporter unit, for example, can catch a mismatch between your return and the information the IRS received from your employer, but it’s not run on your return right after you file it.

So, when you eventually do file your return, the IRS won’t accept it. Instead, they’ll claim that you already filed. At that point, you have a mess on your hands.

Is Having an IP PIN a Good Idea?

The IRS PIN offers a major advantage: You know that as long as you have the PIN, only you can do anything with your Social Security Number as far as the IRS is concerned. That’s a relief if you’ve experienced fraud or are worried that someone may have gotten your Social Security Number. There’s also a disadvantage: You absolutely need that PIN. Without it, the IRS will not let you access your account, and they won’t accept your tax return. You’ll need it whether you file with a paper return or use software. If you e-file without the PIN, your return will bounce back. You also have to include the PINs of anyone else whose Social Security Number is listed on your return, such as a spouse or dependent, who also received an IP PIN. And you can’t leave the PIN program.

Note that states have their own PIN programs for state taxes; you can’t use your IRS IP PIN for those returns.

When Is an Identity Protection PIN Necessary?

If you’ve already experienced federal tax return fraud, the IRS will place you in the IP PIN program once your case has been completed. You should get a CP01A notice that explains the requirements of the program. If you have other questions, you can look at the program’s FAQ page.

The program has changed slightly over the past few years, with a big and welcome change being that now anyone can join the program if they wish and if they can verify their identity. Previously, only residents of certain states could sign up on their own.

How to Get IRS PIN Numbers

If you have not been through IRS-related identity theft but would like to start using an IP PIN, you can request it from the IRS using this application form. Be aware that you will have to prove your identity, and if you’re unable to do that online, you’ll have to meet with an IRS employee in person.
If you’ve experienced fraud or are worried about protecting your account and future refunds, signing up for the PIN program could give you the peace of mind you need, at least regarding your federal taxes. For general protection, basic steps like freezing your credit reports and shredding personal documents are helpful, as is keeping an eye on where your personal information may appear, such as the “dark web.” Spokeo offers services such as Spokeo Protect, which monitors the internet, including scanning the dark web, for your information. You can get immediate alerts if Spokeo finds anything. Protecting against identity theft is a long-term process. Spokeo can help you make it go a little easier.

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