Arizona Residents Now Eligible for IRS Voluntary IP Pin Program

Oct 16, 2019 | IRS Tax Tips, Prescott Accounting, RECENT POST

Arizona Residents Now Eligible for IRS Voluntary IP Pin Program

On October 4th the IRS announced they have expanded the number of states, including Arizona, for which residents can voluntarily apply for an Identity Protection Personal Identification Number (IP PIN).

The IP PIN program was created to combat tax-related identity theft.  Originally the PINs were issued only at the IRS’s discretion to actual or suspected victims of tax-related theft.  In 2010 the IRS created a pilot program to allow for taxpayers to voluntarily request IP PINs, but it was limited to only the three states that had the highest level of tax related identity theft. Last year the IRS expanded the program by offering the program to residents of nine states and Washington DC. During 2019 Congress mandated in the Taxpayer First Act that the program be expanded so that by July 1, 2024 all taxpayers could opt to participate in the program.

For 2020 the program will be offered to those who filed a 2019 income tax return in the following states: Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Texas and Washington.

An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent the misuse of their Social Security number on fraudulent federal income tax returns. Once a taxpayer opts into the program there’s no way to get out of the program. Requesting an IP PIN is strictly voluntary. If you choose not to participate in the program by not requesting an IP PIN, you can file your return as you would normally. If you are assigned or if you request an IP PIN, you must use it to confirm your identity on any tax returns filed electronically during the calendar year.  A new IP PIN is generated for each filing season and can be retrieved starting in mid-January of each year by logging into the account you create. At this time, if you choose to receive an IP PIN, you must use your annually generated IP PIN for all future filings.

There are advantages and disadvantages to the program that a taxpayer should understand before entering the program—but entering the program is something clients likely should consider. The key advantage of entering the program is the taxpayer makes it much more difficult for a third party to use the taxpayer’s information to commit tax-related identity theft.  With the large number of data breaches that have been reported recently, getting an IP PIN may be the only effective way to protect the taxpayer from tax-related identity theft.

There are also issues with the program.  First, remember that once a taxpayer enters this program there’s no way out.  That makes sense, because if there was a simple way out, fraudsters would simply attack that program to “free up” returns.  Security concerns dictate that it should be very difficult, if not nearly impossible, to get out of the program.  But since it will reduce convenience, a number of taxpayers will likely find the program too much of a bother. Another concern with enrolling is the taxpayer must assure that they retrieve and secure the IP PIN each year. The taxpayer will be responsible for getting his/her IP PIN each year by logging into the online account. If the taxpayer loses his/her IP PIN for the year and loses his/her credentials to log into the IRS website to obtain the current year IP PIN, the taxpayer must go through the process to get the IP PIN reissued.

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.

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