Tax identity theft is a serious issue for the IRS as fraudsters continue to find new ways to steal taxpayers’ Social Security numbers and other personal information to file false tax returns. According to a 2019 U.S. Government Accounting Office report, the IRS estimates it unwittingly paid at least $110 million in fraudulent tax refunds in 2017. The growing problem of tax identity theft affects both taxpayers and tax professionals who prepare returns for their clients.
To help fight fraudsters, the IRS created the Identity Protection PIN (IP PIN) to prevent fraudsters from obtaining a tax refund using a stolen Social Security number. It is a six-digit number that is similar to two-factor authentication to require two sources of identification and authorization to file a tax return. Initially, the IP PIN program was available only to professional tax preparers and victims of identity theft, but now the IRS is expanding the program to all taxpayers who apply for it.
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