Identity Protection PINs Available to All Taxpayers (in January)

On December 2, the IRS announced it will allow all taxpayers who desire an Identity Protection PIN (IP PIN) the opportunity to obtain one. This IRS decision is regardless of whether the taxpayer has been (or is fearful of) being the victim of identity theft or lives in an IP PIN test area.

IR-2020-267 indicates that the IRS will make an online portal for obtaining an IP PIN available beginning in mid-January at roughly the same time as the e-filing of 2020 returns opens up. I would expect the release date to be around January 18 or so. Prior to this release, potential identity theft victims were required to complete Form 14039, Identity Theft Affidavit, before an IP PIN could be assigned.

An IP PIN is a six-digit number whose purpose is to provide another layer of security designed to prevent thieves from using someone’s Social Security number to file returns without the taxpayer’s permission. The IRS online tool, Get an IP PIN, is currently off-line while the IRS retools for the 2021 filing season. Once reopened, taxpayers will be able to obtain an IP PIN immediately. Taxpayers will need to identify specific information to their own history, so tax professionals will want to avoid the temptation to have taxpayers ask their tax pro to get an IP PIN for them.

The IP PIN is typically valid for one year. Previous victims of identity theft are sent a new IP PIN each January through the mail. Under the new platform, it is anticipated that the taxpayer will need to obtain a new IP PIN in each subsequent year, assuming they still wish to have one.

In 2022, the IRS expects to offer an opt-out feature for taxpayers who no longer wish to participate in the IP PIN program.

If a taxpayer suspects they are a victim of identity theft they should follow the same procedures IRS has outlined for several years.

Alternative process

Taxpayers who cannot establish their identity online can follow different procedures to obtain an IP PIN, though the number will not be immediately available.

If a taxpayer has income of $72,000 or less, they can complete Form 15227, Application for an Identity Protection Personal Identification Number, and mail or fax it to the IRS. The form won’t be available until January. Once received, the IRS will call the taxpayer to verify the taxpayer’s identity through a series of specific questions.

Taxpayers who pass this process, however, will receive an IP PIN the following tax year.

Taxpayers who cannot verify their identity remotely can make an appointment to visit a Taxpayer Assistance Center, bringing two picture identification forms to establish identity verification with an IRS staff member. Upon successful completion of that meeting, an IP PIN is expected to be mailed to the taxpayer within about three weeks.

With the number of people who have been working remotely in 2020, I expect the incidents of identity theft to explode. I believe this is because, in most cases, people using their home computers and internet access typically do not have the level of internet security and firewall infrastructure that companies have in place. Individuals are also sometimes gullible and swayed by creative thieves to provide personal information.

A good way to experience how this new process will work for your client would be for you to try the system once it’s up and running and get an IP PIN for yourself.

by Tom O’Saben, EA