The IRS’ system for preventing identity theft has run into a bit of a problem. Hackers have exploited the system to steal people’s identities. Last week, there were reports that identity theft victims who had received their PINs from the IRS were finding that someone else had still managed to file a return under their name. The IP PIN online program has been halted pending further review.
Prior to the 2016 tax season, the IRS mailed 2.7 million CP01A letters with IP PINs to taxpayers who had been or could become victims of tax-related identity theft. An IP PIN is a six-digit number that should provide an additional layer of protection. Those who receive an IP PIN are supposed to use it on electronic and paper returns in order for the returns to be accepted for processing.
The PINs had been successful in the past, strengthening processes and filters, which helped the IRS confirm and stop roughly 800 fraudulent returns using an IP PIN. The online tool for retrieving IP PINs is likely how the scammers were able to succeed.
Currently, the IRS is conducting further review of the application that allows people to retrieve their IP PINS online and looking to strengthen its security features.
For certain taxpayers, the online tool was their only means of accessing their IP PIN. For those taxpayers, the IRS is offering the following guidance:
- Lost or misplaced IP PIN letters: Taxpayers who are IP PIN holders but lost their CP01A letters containing the IP PIN will need to call the IRS. If they can verify their identity, they will be mailed their IP PIN. If they have moved since Jan. 1, 2016, they must file a paper tax return, which will receive additional scrutiny and take longer to process.
- Florida, Georgia and District of Columbia participants: Taxpayers who live in Florida, Georgia or the District of Columbia and who already have retrieved an IP PIN should include it on their tax returns. Taxpayers in those locations who have not retrieved an IP PIN will be unable to access the tool at this time but may file their tax return as normal.
- Other taxpayers: Taxpayers who filed a Form 14039 citing non-tax identity theft issues (Box 2) and who already have retrieved an IP PIN should include it on their tax returns.
We will continue to monitor the situation. In the meantime, if you have any questions or concerns about potential identity theft issues, please don’t hesitate to contact us.