Many changes have occurred over the past 12 months due to COVID. One change that many people have failed to think about, let alone prepare for, is the widespread identification fraud that has occurred via unemployment benefits. Many people unexpectedly received a 1099-G from their state unemployment office showing they received unemployment benefits they did not apply for. As alluded to in a recently published article, The Ohio Department of Job and Family Services says that potentially half of the 1.4 million unemployment claims since May of 2020 are fraudulent. If you think you may have been a victim of identity theft, the IRS has shared guidance to assist with a secure tax filing.
One action that is now available to every taxpayer for the 2020 tax season is the Identity Protection PIN (IP PIN). Those who have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) may enroll in the program, as long as you can verify your identity. An IP PIN does not replace your Social Security Number, rather it adds an extra level of protection and is entered on a separate line on your 1040. The IP PIN is specific to each individual every year, thus you will have to receive a new IP PIN each year.
Previously, an IP PIN had to be sent to the taxpayer if the IRS suspected that the taxpayer was a victim of fraud. Now, all taxpayers can receive an IP PIN if they apply. In order to receive an IP PIN, the taxpayer can register on the IRS website after first creating an account. The taxpayer will then receive a specific 6-digit PIN that will be entered onto your 1040. This IP PIN will expire once your 1040 has been filed. The application is available for a specific window each year – mid-January to mid-November.
There is also guidance for taxpayers that are married filing jointly. If the taxpayer is married filing jointly, both the taxpayer and spouse will need to receive individual IP PINs. Also, if a taxpayer has dependents that have received an IP PIN, then the IP PIN must be properly entered on the return in order for the filing to be accepted. If you lose any IP PINs that are going on your return, you must verify your ID again in order to obtain the lost IP PIN.
If you need any assistance applying for an IP PIN or have questions regarding this information, please reach out to a member of your GBQ team.
Article written by:
Tax Senior Manager
Tax Rotation Staff