The last few years have been difficult ones for the IRS with respect to security issues, and the agency is determined to improve security during this year's filing. Electronic filing is particularly vulnerable because of the speed of the process — it is a favorite method among thieves who steal information from taxpayers and file fraudulent tax returns in their name.
As Bankrate.com Senior VP and Chief Financial Analyst Greg McBride points out, "Tax ID fraud is one of those things where somebody can have your Social Security number and they could have been sitting on it for a while, and you would have no idea until they go and file a bogus tax return under your Social Security number. You only find out at the point where your legitimate return gets rejected." Protect your credit – protect your identity – protect yourself with a MoneyTips Premium membership.
Betterment Head of Tax Eric Bronnenkant gives the following example: "Let's say someone steals your Social Security number and they file a return illegally using that, so then when you actually go to file your tax return, the IRS is going to say, 'Wait a minute, you already filed and we already sent you a refund.' Now you have to spend, let's say approximately six months, a year, some exorbitant amount of time fighting with the IRS to ultimately get the refund that you actually deserve."
Among the proactive steps that the IRS has taken is to eliminate the option of an electronic filing PIN (e-PIN) to prove your identity on your electronic filing. There are currently three options for verifying an electronic form: an IRS Self-Select PIN from the previous year's filing, entry of your previous year's adjusted gross income (AGI), or an IRS-issued Identity Protection PIN (IP PIN) number.
The IP PIN is a six-digit number assigned by the agency that prevents someone else from filing a tax return using your Social Security number. Starting in 2021, all taxpayers can voluntarily opt into the IRS IP PIN program as a proactive way to protect your personal and tax information from identity theft. IP PINs are mailed to recipients in December or January for the next season's filing and are only good for that year — a new IP PIN is mailed to you in a CP01A notice each tax season.
Once you are assigned an IRS IP PIN, you must use that as your identification tool for federal tax returns. Your electronic return will be rejected without it, and your paper return will be delayed until your identity can be properly verified.
If you lose your IP PIN, don't panic. You can use the Get an IP PIN online tool to retrieve your IP PIN. The opening page will list the items you need to prove your identity and retrieve your PIN.
The IRS Self-Select PIN is a five-digit number of your choosing. Any combination except all zeroes is allowed. You can choose a new Self-Select PIN for the purposes of signing an electronic return, but if you want it to serve as identification, you will need to use last year's Self-Select PIN number as this year's number.
If you need your 2019 AGI as proof of identity, you will find it on line 8b on Form 1040 for the 2019 tax year that you filed in 2020. First–time filers over age 16 should enter an AGI of zero.
Did you forget to keep a copy of last year's return? If you used a commercial tax preparer, you may be able to acquire a copy of your 2019 tax form from them. Otherwise, you can access your 2019 tax form by using the Get Transcript Online page on the IRS website. You can choose to access your transcript immediately online or have a transcript mailed to you. Mailed transcripts will arrive within five to ten calendar days of the request.
The online method requires stricter security measures, so if you find you don't have the necessary information, you may have to resort to the mailing method.
Go ahead and grumble about the extra steps if you must, but let's give the IRS credit. They are taking the necessary measures to reduce instances of tax identity fraud. Keep that in mind as you file your taxes, and let's hope that their measures succeed.
The IRS and Treasury Department have extended the 2021 tax filing deadline from April 15 to May 17, due to the COVID-19 pandemic. In the interest of safety and to curb the spread of the coronavirus, all Taxpayer Assistance Centers (TAC) and face-to-face IRS services operate by appointment only. Taxpayers can call 844-545-5640 to schedule an appointment or find your local IRS TAC here. See the IRS Coronavirus Tax Relief page for the latest updates.
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