What is an IP PIN and Do You Need One? – Smith and Howard – CPA

identity larceny has become a serious trouble and fraudsters have used stolen identities to file delusive tax returns and claim refunds before the rightful filers can do so. even children ’ second Social Security numbers are being targeted .
The Internal Revenue Service ( IRS ) created an identity Protection Personal Identification Number ( IP PIN ) Opt-In Program to protect taxpayers whose identities had been stolen. Although the program was initially for victims of identity larceny, it is being expanded in phases to all taxpayers. The IP PIN is a six-digit phone number assigned to eligible taxpayers to help prevent the misapply of their Social Security number on deceitful federal income tax returns. An IP PIN is used only on Forms 1040, 1040PR and 1040SS .
There are a count of reasons for signing up for an IP PIN, but besides some drawbacks. Data breaches have become prevailing and most of us have our personal information stored somewhere on-line, which means we risk having that information leaked or stolen. The IP PIN offers a greater level of security when it comes to protecting people from tax-related crimes. The IP PIN is an important creature as it will thwart tax-related identity larceny, preventing many of the problems that come with identity larceny. If your identity is stolen, the IRS flags your score for the next three years, resulting in slower process of your tax render and a delayed refund if one is due .
once you sign up for an IP PIN, you will be in the program for life. The IP PIN changes each year, unlike the four-digit PIN that people use without the indigence for change when filing on-line taxes each year. Some people may find that annual deepen cumbersome. The IRS will automatically send taxpayers a new IP PIN by mail each January, which makes it vital for taxpayers who have moved to use form 8822 to inform the IRS of an address change. Without a new IP PIN, taxpayers will have issues filing their federal tax return. They will have to file their tax retort on newspaper, by mail, as the IRS will reject any electronic adaptation submitted without the proper IP PIN.

That is where having a tax adviser or tax preparer can make life less nerve-racking. They can help walk taxpayers through the work of applying for an IP PIN and notifying the IRS if there has been identity larceny. A tax adviser can besides assist taxpayers with recovery of their IP PIN if it is lost or if they do not receive their annual CP01A letter in January. Retrieval of an IP PIN can take up to 21 days as the IRS will have to send it by mail. If a return is filed after October 14, it will have to be filed on newspaper and the IP PIN can not be used .
You are eligible this year for the on-line IP PIN Opt-In Program if you filed a federal tax render in 2019 as a resident of one of the following 20 states : Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Florida, Illinois, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Texas and Washington. The IRS will send a CP01A notice or letter in early January to taxpayers eligible to receive an IP PIN in 2020. It hopes to make the plan available to all taxpayers by 2024 .
To sign up, use the on-line Get an IP PIN tool, which became available mid-january. If you do not already have an account on IRS.gov, you will first have to register in order to validate your identity .

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