Tax Tips — August 26, 2021

This IRS Tool Could Save Billions via Tax Fraud Prevention

by Susannah McQuitty

Graphic of a padlock

This IRS Tool Could Save Billions via Tax Fraud Prevention

Update February 7, 2022:You may need to set up an account to set up an Identity Protection PIN, but the IRS will be transitioning away from facial recognition technology by the end of February 2022.

22.8 billion dollars—that’s how much was lost to tax fraud and other improper refund payments in 2020, according to the Treasury Inspector General for Tax Administration.

Instead of addressing infrastructure, school, and other needs, those billions went straight to the pockets of people via tax refunds that they didn’t qualify for. Many of them were scammers.

What can we do to reduce that number? One significant way is to fight fraudulent tax returns, and the IRS has expanded a long-standing identity protection strategy to do exactly that.

Enter the Identity Protection PIN, a magic number only you and the IRS know.

An Identity Protection Personal Information Number (IP PIN) is a 6-digit number known only to you and the IRS. It’s only good for one year, and to receive one, you have to pass the IRS’s robust authentication process.

IP PINs are nothing new—originally, they were only available to victims of identity theft as an added layer of protection. Now, the program is available to anyone who can prove their identity to the IRS.

Though an IP PIN won’t prevent your SSN from being stolen, it’s built to prevent impostors from using your SSN to file a tax return with your information.

Having an IP PIN can protect you even if you don’t have to file a tax return.

Not required to file? An IP PIN is still a great tool to protect yourself. A thief with your SSN can file a return with your information, and the fallout can be just as dire.

Only a tax return with your IP PIN on it will be accepted.

Because of that, even fraudsters who might have your Social Security Number and prior-year AGI still won't be able to file an accepted return with your information.

Make sure that you include your IP PIN when you file, even if you have your prior-year AGI, to avoid rejection. For users, the IP PIN entry is on the page after prior-year AGI. If you don't have your prior-year AGI, here's what to do.

Getting an IP PIN is simple, but make sure you have proof of identity before you apply.

Since your IP PIN is a preventative measure against the misuse of your identity, you better bet the application is thorough. That said, the IRS’s identity verification process is simple if you have all the answers at your fingertips.

Our IP PIN Application Checklist is designed to help you do just that, and it’s a free resource we’ve created to help you keep your personal information safe from scammers out there.

Get your checklist and then head to the IP PIN application page.

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