We guarantee the biggest, fastest tax refunds allowed by law.

Find a Location
RSS Newsletter Signup (click to preview)
Search PRO-TAX

Identity Theft and The IRS

By: Chuck Strauss

January 4, 2013

The IRS is seeing an increase in identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund. In response to this growing problem, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. The IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued, as well as working to help victims of identity theft refund schemes.

Essentially, the IRS will “lock” a taxpayer’s account when they suspect identity theft so that their return cannot be filed unless and until the issue is resolved. The IRS creates a proactive identity theft indicator that prevents a taxpayer’s Taxpayer Identification Number (TIN), which is their social security number, or an individual taxpayer identification number (ITIN), from being used for a current or subsequent year federal income tax return.

An IRS notice informing a taxpayer that more than one return has been filed in their name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized. If you have received a notice from the IRS that they believe you have experienced identity theft, you will need to complete an Identity Theft Affidavit and return it with a copy of the notice to the address contained in the notice.

The IRS has an Identity Protection Specialized Unit that can be reached Monday through Friday, 8:00 AM to 8:00 PM, local time at 1-800-908-4490.

Whenever there is a case of identity theft recorded by the IRS, the agency will issue the victimized taxpayer a six-digit “Identity Protection Personal Identification Number”(IP PIN).  The IP PIN must be included on their 2012 Federal income tax return—and only for the 2012 tax year.

The affected taxpayers will have received their IP PIN in a notice (Notice CP01A) from the IRS in December 2012. This notice includes their 6-digit IP PIN and information on the use of the IP PIN.  Affected taxpayers will receive two notices. The first notice (letter 4868CS) was sent out to affected taxpayers in mid-November. A second notice (letter 4869CS) was mailed in mid-December and contained the actual IP PIN with instructions. An affected taxpayer will receive a unique 6-digit PIN each year for 3 years following verification by the IRS.

Taxpayers will need to keep the notice of the IP PIN and include it in their tax return – and bring it in with the rest of their tax information when they come to have their 2012 income tax return prepared. The IP PIN they must be entered correctly on their 2012 Federal return or the IRS will reject their return. The inclusion of the IP PIN will allow the return to be processed normally and will not delay their refund.

Please note that the unique six-digit IP PIN is valid only for the tax year for which it was issued and only for Tax Forms 1040, 1040A and 1040EZ. Remember that the IP PIN received this past December is only for use on the 2012 return. A new notice and IP PIN will be issued each subsequent year in December.

If you misplace the IP PIN, you can quickly get a replacement IP PIN by contacting the IRS Identity Theft Specialized Unit, or IPSU at 1-800-908-4490, ext. 245, or the IRS Help Desk at 1-800-829-1040 or by visiting a Taxpayer Assistance Center.  

Also, if taxpayers filing jointly both received IRS Notice CP 01A and an IP PIN -- that is, in case both spouses had an identity theft problem and both have IP PINs -- only the primary’s IP PIN should be entered on the 2012 tax return.That is, the respective IP PIN of the taxpayer appearing first on the return (the primary taxpayer) is to be used on the return.

For further reading:

The IRS has a Special Identity Theft Document that taxpayers should find helpful. Here are additional links for further reading:

IRS Resources Web Page for Identity Theft

IRS Frequently asked Questions re Identity Theft

Protect Yourself from Identity Theft

Understanding Your CPO1A Notice

Taxpayer Guide to Identity Theft

In addition, review this Link from the Social Security Administration which might be especially helpful.  In addition, keep in mind that losses due to identity theft may be deductible as an itemized deduction of the “Schedule A” of the 1040 tax return. Feel free to consult your PRO-TAX professional tax preparer for more information. Call us at 1-800-809-2829, or click here for a guide to our locations.