CARL WATTS & ASSOCIATES

July 09, 2018

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Identity Theft & the Identity Protection
Personal Identification Number
Identity theft places a burden on its victims and presents a challenge to businesses, organizations and government agencies, including the IRS.

According to 2018 Identity Fraud: Fraud Enters a New Era of Complexity from Javelin Strategy & Research, in 2017, there were 16.7 million victims of identity fraud, a record high that followed a previous record the year before. Criminals are engaging in complex identity fraud schemes that are leaving record numbers of victims in their wake. The amount stolen hit $16.8 billion last year as 30 percent of U.S. consumers were notified of a data breach last year, an increase of 12 percent from 2016. For the first time, more Social Security numbers were exposed than credit card numbers.


For 2018, the IRS, the states and the tax industry joined together to enact new safeguards and take additional actions to combat tax-related identity theft.

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. You may be unaware that this has happened until you e-file your return and discover that a return already has been filed using your SSN. Or, the IRS may send you a letter saying they have identified a suspicious return using your SSN.

Recently, the IRS upgraded its identity verification process for certain online self- help tools. The purpose is to prevent taxpayer impersonations and account takeovers by identity thieves. Because the Secure Access Authentication platform is more rigorous, it helps if you prepare to register in advance.

Currently, the Secure Access authentication process applies to Get Transcript Online, Get an IP PIN, e-Services and online tax account.

Be alert to possible identity theft if you receive a notice from the IRS or learn from your tax professional that:

More than one tax return for you was filed;

You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return;

IRS records indicate you received more wages than you actually earned, or

Your state or federal benefits were reduced or cancelled because the agency received information reporting an income change.

If you receive a notice from the IRS and you suspect your identity has been used fraudulently, respond immediately by calling the number on the notice.

Complete IRS Form 14039, Identity Theft Affidavit, if your efiled return rejects because of a duplicate filing under your SSN or you are instructed to do so. Use a fillable form at IRS.gov, print, then attach the form to your return and mail according to instructions. The form is downloadable from the IRS website and you can type directly onto it. Check the first box to indicate identity theft as the reason behind the notice you received. Submit your completed form with a photocopy of official identification such as your driver's license, passport, Social Security card or government-issued ID card.


Taxpayers identified as being victims of an identity theft that has affected the filing or processing of their federal tax returns in one or more prior tax years will receive from the IRS Notice CP01A which provides the taxpayer with a 6-digit identity protection PIN (IP PIN).

An Identity Protection Personal Identification Number, or IP PIN, is a single-use identification number issued to a taxpayer who has previously been the victim of identity theft. The IP PIN is used to protect the taxpayer by preventing their tax account from being used by anybody else. The IP PIN will be required to file your return to authenticate your identity. The IP PIN avoids delays in processing victims’ federal tax returns by helping the IRS distinguish between the genuine taxpayer, who has been issued the IP PIN, and a possible identity thief.

The IP PIN is valid for a single tax return. A new CP01A Notice and IP PIN will be issued each subsequent year in late December or early January for the new filing season for as long as the taxpayer’s tax account remains at risk for identity theft.

The IP PIN is only used for federal income tax return and only for Forms 1040, 1040A, 1040EZ or 1040PR/SS. Do not include your IP PIN on your state return.
You're eligible for an IP PIN if:

You received a CP01A Notice containing your IP PIN, or

You filed your federal tax return last year as a resident of Florida, Georgia or the District of Columbia, or

You received an IRS letter inviting you to 'opt-in' to get an IP PIN.

The IRS selected Florida, Georgia and the District of Columbia for a limited pilot program because those are the locations with the highest per-capita percentage of tax-related identity theft. The pilot program is an expansion of the current IP PIN program, which (generally) has only been used for victims of identity theft. The pilot is not limited to just identity theft victims.

Under this pilot program, any taxpayer who filed a tax return from one of those three locations last year and obtains an e-file PIN this year from the IRS, may be offered an opportunity to apply for an Identity Protection PIN (IP PIN).

The vast majority of taxpayers do not need an e-file PIN to file their taxes. In some cases, a taxpayer must obtain an e-file PIN if they need to e-file a tax return or other electronic forms, but they do not have their Self-Select PIN or Adjusted Gross Income from their previous tax return to verify their identity. In these cases, the taxpayer may request an e-file PIN on the IRS website.


Here is how you can get the IP PIN:

If you received a CP01A Notice in December, your IP PIN is located at the bottom of the first column.

If you filed your tax return last year with an address in Florida, Georgia or the District of Columbia, you're invited to participate in the IP PIN program by going to Get an IP PIN. The program is not limited to identity theft victims.

If you lost your IP PIN or didn't receive your new one, Retrieve Your IP PIN for more information.



After you get an IRS IP PIN, you need to proceed as follows:

You must use the IP PIN on all federal income tax returns 1040, 1040A, 1040EZ and 1040 PR/SS and any delinquent returns filed during the respective calendar year.

Don’t reveal your IP PIN to anyone other than your tax preparer. Reveal it only when you are ready to sign and submit your federal income tax return.

You can't use your IRS IP PIN on a state income tax return. If you state also issues identity protection PINs, use it only for the state income tax return.

If you file your federal tax return without your IRS assigned IP PIN, your electronic return will be rejected and you won't be able to e-File. Also,your paper return will be subject to additional screenings to validate your identity and will delay any refund you may be receiving.

In the end, assuming that your identity belongs uniquely to yourself, here are a few tips to protect you from becoming a victim of identity theft:

Don’t carry your Social Security card or any documents that include your Social Security number or Individual Taxpayer Identification Number.

Don’t give a business your SSN or ITIN just because they ask. Give it only when required.

Protect your financial information.

Secure personal information in your home.

Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for internet accounts.

Don’t give personal information over the phone, through the mail or on the internet unless you have initiated the contact or you are sure you know who you are dealing with.


There are many other measures you can take to protect your identity and personal information and we can only hope that you consider this issue seriously.

As always, our advice to you is not to hesitate looking for professional help with your taxes and other matters of importance for you and your dear ones.
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