Obtaining an Identity Protection PIN (IP PIN) is a proactive step designed to protect yourself from Tax-Related Identity Theft. Inheritors of significant wealth can be especially vulnerable to this type of identity theft. We wrote about the topic last year in a Blog article, which you are encouraged to reference. In brief, tax-related identity theft is when someone uses your personal information to file a fraudulent tax return in your name, claiming a refund. It can be costly and time-consuming to sort things out if this happens to you, and the increase in the number of cases the IRS must deal with is growing to the point where it can take close to two years (on average) for things to get resolved. The best course of action is prevention. Obtaining your IP PIN is one of several suggested measures to prevent tax-related identity theft. Used together, these can help prevent against tax fraud:
- File your tax return early if possible.
- Use strong passwords and security measures on financial accounts.
- Never share your social security number unless absolutely necessary.
- Monitor your credit reports for unusual activity.
- Sign up for an IP PIN for extra security, which we’ll focus on here.
What is an Identity Protection PIN (IP PIN)?
The IP PIN is a six-digit number issued by the IRS that adds an additional layer of security to the process of filing your tax return. It’s provided in conjunction with your Social Security Number (SSN) or your Individual Taxpayer Identification Number (ITIN). This is a separate and distinct number from the 5-digit PIN many taxpayers use to e-file.
How do I obtain an IP PIN?
The easiest way to do so is online through your ID.me account (the IRS secure login system). If you do not have an ID.me account, you must first create one. Visit the IRS.gov website to log in or create a new account. You must have a form of identification such as a driver’s license or passport to create a new account.
If you cannot or do not wish to obtain your IP PIN online, you can file an application using Form 15227.
If all else fails, you can make an appointment for an in-person meeting at your local Taxpayer Assistance Center.
Note: If you are a confirmed victim of tax-related identity theft, the IRS automatically assigns you an IP PIN and mails one to you each year.
Do I have to use an IP PIN?
It’s not necessary to obtain an IP PIN in order to file your Federal tax return, but it’s highly recommended. Once you opt in, you will need a new IP PIN each year. If you originally obtained your IP PIN online, you will use the IRS “Get an IP PIN” tool within your ID.me account to get a new one. If the IRS issues your IP PIN by mail, it usually arrives by early January.
If you’re opted in to the IP PIN program, the IRS may reject your e-filed return, or there may be a delay in processing if you file without your IP PIN.
How is my information protected? Should I worry about providing my personal information to the private company the IRS uses to verify my identity (ID.me)?
The short answer is that no system has guaranteed immunity from breaches. ID.me does have safeguards in place to protect your data. All biometric information and photos used to verify you are deleted from the system within 24 hours. The most important safeguard is that ID.me does not have access to your IRS records as part of the verification process. If you close your ID.me account, all information is purged after three years.
The IRS does NOT issue IP PINS over the phone or via email or text. Beware of solicitations you may receive such as phishing emails or smishing texts asking you to “verify” or “retrieve” your IP PIN. Fraudsters may pose as IRS agents claiming the need to reset or confirm your IP PIN (they may make threatening statements in an attempt to pressure you). Always go directly to the IRS.gov website to access official resources. Never share your IP PIN with anyone; only enter it on your official tax return. If you do receive any sort of suspicious contact regarding your IP PIN, you can report it by emailing phishing@irs.gov.
If you are a client of The Wealth Conservancy and would like additional information about the Identity Protection PIN or help navigating the process of obtaining one, please reach out to your advisor, who will be happy to assist you. We are urging all clients to make use of this added layer of security.