What is an IP PIN and Why is It Important this Tax Season?

The Internal Revenue Service (IRS) is encouraging taxpayers to obtain an Identity Protection PIN (IP PIN) as a necessary step to avoid tax fraud around tax returns.

In February 2024, Change Healthcare, a healthcare services technology company, suffered the largest known breach of Protected Health Information (PHI). The company ultimately paid a $22 million ransom to a hacker group called ALPHV/Blackcat only to find the data for sale after BlackCat presumably failed to destroy the PHI. What does this mean for taxpayers? 

Change Healthcare has notified 100 million taxpayers that a wide selection of information may have been stolen, including:

• Name, address, date of birth, phone numbers, email, social security, and driver's license numbers.
• Health insurance data like policies, member/group ID, Medicare/Medicaid payor numbers.
• Billing and payment data, insurance claims, codes, financial and bank account numbers

The information lost in this vast ransomware attack is a goldmine to bad actors considering tax fraud, identity theft, or other types of financial or tax crime. The IRS warns taxpayers annually about scammers who use stolen personal information to file for and claim the tax refunds of others.

To deter refund fraud, the IRS is suggesting that taxpayers sign up for an IP PIN. An IP PIN is a unique identifier for taxpayers to use to ensure their tax account—and refund—is not taken over by fraudsters. 

IP PINS are a good idea for anyone who is aware they have suffered a data breach. With the Change Healthcare breach, the millions of taxpayers whose data was compromised are potentially at risk of identity theft, financial fraud, tax return fraud, and other longer-term identity fraud.

Here are some points to know about IP PINS:

• An IP PIN is a unique six-digit number you can use to file your tax returns—which means your tax account is safe from cyber criminals who have gained access to your tax identification number (TIN) or your social security number.
• To maintain security, IP PINS are valid for one calendar year; new PINS are issued in January.
• IP PINS can be used with federal tax returns, any prior year return, or an amended tax return.
• Taxpayers can sign up for an IP PIN and can later opt out of the program through their online IRS account.

Data breach is no longer uncommon and neither is tax fraud. If you know your contact and other information is compromised, consider additional steps like an IP PIN to maintain the security of your tax return—and your refund.

Speak to knowledgeable criminal tax defense lawyers regarding a criminal tax charge or other tax litigation

Serving clients nationwide from offices in Cleveland and Chicago, the tax attorneys of Robert J. Fedor Esq., LLC provide trusted representation on criminal tax defense, offshore tax investments, and compliance matters. Call us at 440-250-9709 or contact us online.