For years, the IRS has tested a variety of methods to combat identity theft in the realm of tax filings. Since 2011, the Service has run a pilot program which issues PINs to victims of identity theft. A PIN is a six-digit code that prevents someone else from filing a tax return using just your social security number, requiring an additional step in security. Once a PIN is issued, it must be included in the taxpayer’s tax return to be accepted as valid.

The program has proven to be successful in cutting down on tax fraud, but has only been made available to those who 1) were previously victims of identity theft and 2) submitted a request. Recently, the IRS announced that the program is now available to all. For full information, visit: IRS News Release 2021-9.

“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. “Electronic returns that do not contain the correct IP PIN will be rejected, and paper returns will go through additional scrutiny for fraud.”

Should You Do It?

Certainly, if you have been the victim of identity theft, a PIN for your tax return is highly recommended. If you have not been such a victim, or are unaware of any problem, it may still be in your interest to apply for the program. It is often difficult to know if you have been the victim of identity theft until it is too late and the damage is done, so adding in this layer of security with a PIN could be part of a robust plan of personal protection.

There are, however, some caveats to the program.

• The PIN must accompany your tax return when filed. If the number is lost, it can be obtained again through the IRS but could delay filing.
• Once you are in the program, you must stay in it for future years. At present, there is no opt-out, although there is expected to be one beginning in 2022.
• If you change your address, you must file Form 8822 Change of Address with the IRS prior to filing your return (versus simply notifying the IRS of your new address by reporting the change on the 1040 itself).

To Opt In

There are two methods to opt-in to the program, the deciding factor being your adjusted gross income.

Adjusted gross income at or below $72,000:

• Applications are accepted via phone or mail using Form 15227.
• After submission, the IRS will call the taxpayer for identity validation.
• If identity validation is successful, the IRS will use a PIN will be issued for the next tax filing year.

Adjusted gross income over $72,000:

• Applicants are required an in-person visit to an IRS service center.
• Taxpayers should complete and bring Form 15227 plus two forms of identification, including one government-issued photo ID.

What to Expect

The IRS mails the taxpayer a CP01A containing a six-digit identity protection PIN. Moving forward, expect to include this PIN in electronically filed or mailed tax returns for the year it was applied to. Don’t forget, this number changes every year and taxpayers in the program should expect to receive a new one each January.

If you have questions regarding your decision to apply for an IRS Identity Theft PIN, contact your CPA for additional information.