Starting this year, most taxpayers in three areas that have
seen high levels of tax-related identity theft—Florida, Georgia and Washington,
D.C.—are eligible for an extra layer of protection from the Internal Revenue
Service. People who filed federal returns last year as residents of those
jurisdictions can apply on the IRS website for an “identity
protection personal identification number,” or “IP PIN”—an extra proof of their
identity that, once obtained, must be included on their federal tax returns.
These three locations have the highest per-capita percentage of tax-related ID
theft, the IRS says.
The IP PIN program was launched in 2011, primarily for past
victims of identity theft. Last year, the PINs were offered for the first time
to a limited number of people seeking to e-file federal returns from Florida,
Georgia and Washington, D.C. So far, about 1.5 million people have IP
PINs, the IRS says. The pilot program is intended to help determine
taxpayer demand and also the ability of the IRS to issue the PINs to a larger
number of taxpayers.
People who sign up for the IP PIN program get a unique
six-digit number each year that must go on their return. That prevents someone
else from successfully filing a return in their name, even if fraudsters have
their Social Security number, the IRS says.
Stolen-identity refund fraud—in which fraud artists use
stolen personal information to file tax returns seeking refunds—has been a
problem at the federal and state level for years.
Last week, a spate of fraudulent filings at the state level
led the biggest provider of online tax-preparation software, Intuit’s TurboTax
unit, to temporarily suspend electronic filing of all state tax returns.
The company said its systems weren’t breached, and it resumed state e-filing
about 24 hours later after tightening antifraud measures.
The Federal Bureau of Investigation has opened a probe to
determine whether a computer data breach led to the filing of false tax returns
through TurboTax. Meanwhile, some Journal readers have complained of finding
that fraudulent federal returns had been filed in their names—and some state
tax authorities and security experts have said some fraudulent state and
federal filings include data apparently taken from 2013 returns.
A lot of people don’t yet know about IP PINs, says Raul O.
Serrano, Jr., a CPA in Hollywood, Fla. But he says some clients have called and
asked about them, and those clients who already have the extra security measure “feel
very safe with it.” Colin Blalock, a CPA in Atlanta, says he recently suggested
the IP PIN to a friend whose credit accounts were compromised and also in a
case where a person going through a nasty divorce wanted to ensure that the
other spouse couldn’t file a joint return.
Individuals who get an IP PIN shouldn’t reveal it to anyone
other than their tax preparer—and only when they are ready to sign and submit a
return, the IRS says. The PINs can’t be used on state returns.
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