CARL WATTS & ASSOCIATES

May 05, 2014

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The IRS Identity
Protection PIN
As statistics demonstrate, identity theft may be the most frequent, costly and pervasive crime in the Unite States.

Approximately 15 million United States residents have their identities used fraudulently each year with financial losses totaling upwards of $50 billion. 

Close to 100 million additional Americans have their personal identifying information placed at risk of identity theft each year when records maintained in government and corporate databases are lost or stolen.

While we whole-heartedly hope you are safe and take precautions so that your identity is never at risk, we also acknowledge that being well informed is of great help whenever you encounter difficulties.

Here is what you should know about identity theft and your taxes.

Refund fraud caused by identity theft is one of the biggest challenges facing the IRS. Stopping refund fraud related to identity theft is a top priority for the tax agency. The IRS is focused on preventing, detecting and resolving identity theft cases as soon as possible. The IRS has more than 3,000 employees working on identity theft cases. As a result of these aggressive efforts to combat identity theft from 2011 through November 2013, the IRS has stopped 14.6 million suspicious returns, and protected over $50 billion in fraudulent refunds.

In Fiscal Year 2013, the IRS initiated 1,492 identity theft related criminal investigations, an increase of 66 percent over investigations initiated in FY 2012. Indictments and sentencing doubled in FY 2013 and the average prison term was more than three years (38 months) – the longest sentenced being 26 years.

Taxpayers can encounter identity theft involving their tax returns in several ways. One instance is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen. 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.

If you did not receive an IRS notice but believe you’ve been the victim of identity theft, contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245 right away so they can take steps to secure your tax account and match your SSN or ITIN.

You should also fill out the IRS Identity Theft Affidavit, Form 14039. 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. Follow the mailing or fax instructions on your notice or on Form 14039.

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).

These taxpayers have previously contacted the IRS concerning the identify theft and the IRS has validated their identity, verified that they were victims and adjusted their accounts.

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.

For the tax year 2013 filing season, the IRS has provided more than 1.2 million taxpayers with an IP PIN. For the second tax season in a row, the number of IP PINs has nearly doubled from the year before.

If an IP PIN is assigned to a taxpayer for their 2013 return, the IP PIN must be used on any delinquent 2011 and 2012 returns filed during the 2014 calendar year.

IRS is exploring the use of an online process through IRS.gov that will allow taxpayers who have an IP PIN requirement and lose their IP PIN to create an account and receive their original IP PIN online. 


As part of its comprehensive identity theft strategy, the IRS is offering a limited pilot program to help taxpayers who filed their returns last year from Florida, Georgia and the District of Columbia. This additional layer of security for identity theft would be available to taxpayers who need an Electronic Filing PIN (e-file PIN) to submit their tax return this year. 



Under the pilot, 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 IRS encourages taxpayers who are offered this opportunity in this pilot program to complete the process to get the IP PIN.

The IRS selected Florida, Georgia and the District of Columbia for the pilot because those are the locations with the highest per-capita percentage of tax-related identity theft. The pilot 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. 

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.

Following the pilot, the IRS will carefully assess the results and performance before deciding on how to proceed with the program.

For additional information you can consult the Taxpayer Guide to Identity Theft or the Identity Theft Protection page on the IRS website.

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.
  • Check your credit report every 12 months.
  • 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.

Of course, there are many other measures you can take to protect your identity and we can only hope that you consider this issue seriously.

Check our website frequently to keep up-to-date with news and important information regarding your taxes and financial situation.
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