Up until 2015, people who wanted to file taxes electronically could do it very easily and the IRS had little power to verify that the return was legitimate.  This led to enormous abuses a decade ago and millions of dollars in fraudulent tax refunds being sent out every year for stolen identities.  There’s no way to retrieve a fraudulent refund, so new screening tools were implemented to catch suspicious tax returns.

For those who were victims of tax ID theft, the solution was an Identity Protection PIN- a six-digit number, unique to each taxpayer and year, that had to accompany any e-filed return in order to be processed.  Thanks to this and other measures, tax ID theft has gone down substantially, though still a concern.

Every January, those who experienced ID theft in the past will get a special tax notice, CP01A, that is mailed directly to their home address with the IP PIN for that tax year.  If that notice is lost, the PIN can be retrieved online or by phone, but taxpayers will have to take complicated steps to prove their identity, so holding onto the notice is best.

For those who haven’t yet had tax ID theft issues, but have concerns and want to protect themselves, there is now a way to opt into this system.  Anybody who wants to can now get an IP PIN from the IRS. Go to IRS.gov and search for the Get an IP PIN tool.  The IRS has a new system that utilizes cell phone cameras and driver’s licenses to compare faces and identities.  The ID.me system is being used by the IRS to set up online accounts and is the best way to opt into this new safeguard of the IP PIN.  Once in the system, they will receive notice CP01A each year in January unless they opt out.

Written by Dan Connors