Security Summit: Tax pros should encourage clients to obtain IP PINs to protect against tax-related identity theft

WASHINGTON – Internal Revenue Service Security Summit partners today called on tax professionals to increase efforts to inform clients about the Identity Protection PIN Opt-In Program that can protect against tax-related identity theft.
 
The IRS, state tax agencies and the nation’s tax industry – working together as the Security Summit  –  need assistance from tax professionals to spread the word to clients that the IP PIN is now available to anyone who can verify their identity.

Sharing information about the IP PIN Opt-In Program is the second in a five-part weekly series sponsored by the Summit partners to highlight critical steps tax professionals can take to protect client data. This year’s theme “Boost Security Immunity: Fighting Against Identity Theft” is an effort to urge tax professionals to intensify efforts to secure their systems and protect client data during this pandemic and its aftermath.

“An Identity Protection PIN prevents someone else from filing a tax return using your Social Security number,” said Chuck Rettig, IRS commissioner. “We’ve now made the IP PIN available to anyone who can verify their identity. This is a free way for taxpayers to protect themselves, but we need the help of tax professionals to make sure more people know about it.”

The IRS created Publication 5367, IP PIN Opt-In Program for Taxpayers, in English and Spanish, so that tax professionals could print and share the IP PIN information with clients. There are also special posters available in English and Spanish.

For security reasons, tax professionals cannot obtain an IP PIN on behalf of clients. Taxpayers must obtain their own IP PIN.

Summit partners urged taxpayers and tax professionals to protect the IP PIN from identity thieves. Taxpayers should share their IP PIN only with their trusted tax prep provider. Tax professionals should never store clients’ IP PINs on computer systems. Also, the IRS will never call, email or text either taxpayers or tax preparers to request the IP PIN.

Tax professionals who experience a data theft can assist clients by urging them to quickly obtain an IP PIN. Even if a thief already has filed a fraudulent return, an IP PIN would still offer protections for later years and prevent taxpayers from being repeat victims of tax-related identity theft.

Here are a few things taxpayers should know about the IP PIN:

  • It’s a six-digit number known only to the taxpayer and the IRS.
  • The opt-in program is voluntary.
  • The IP PIN should be entered onto the electronic tax return when prompted by the software product or onto a paper return next to the signature line.
  • The IP PIN is valid for one calendar year; taxpayers must obtain a new IP PIN each year.
  • Only dependents who can verify their identities may obtain an IP PIN.
  • IP PIN users should never share their number with anyone but the IRS and their trusted tax preparation provider. The IRS will never call, email or text a request for the IP PIN.

Currently, taxpayers may obtain an IP PIN for 2021, which should be used when filing any federal tax returns during the year. New IP PINs will be available starting in January 2022.

To obtain an IP PIN, the best option is the Get an IP PIN, the IRS online tool. Taxpayers must validate their identities through Secure Access authentication to access the tool and their IP PIN. Before attempting this rigorous process, see Secure Access: How to Register for Certain Online Self-Help Tools. The tool is offline between November and January.

If you are unable to validate your identity online and if your income is $72,000 or less, you may file Form 15227, Application for an Identity Protection Personal Identification Number. The IRS will call the telephone number provided on Form 15227 to validate your identity. However, for security reasons, the IRS will assign an IP PIN for the next filing season. The IP PIN cannot be used for the current filing season.

Taxpayers who cannot validate their identities online, or on the phone with an IRS employee after submitting a Form 15227, or who are ineligible to file a Form 15227 may call the IRS to make an appointment at a Taxpayer Assistance Center. They will need to bring one picture identification document and another identification document to prove their identity. Once verified, the taxpayer will receive an IP PIN via U.S. Postal Service within three weeks.

The IP PIN process for confirmed victims of identity theft remains unchanged. These victims will automatically receive an IP PIN each year.

Additional resources
Tax professionals also can get help with security recommendations by reviewing the recently revised IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security: The Fundamentals by the National Institute of Standards and Technology. The IRS Identity Theft Central pages for tax pros, individuals and businesses have important details as well.

Publication 5293, Data Security Resource Guide for Tax Professionals, provides a compilation of data theft information available on IRS.gov. Also, tax professionals should stay connected to the IRS through subscriptions to e-News for Tax Professionals and Social Media.

For more information, see Boost Security Immunity: Fighting Against Identity Theft.

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The Child Tax Credit Update Portal allows families to update direct deposit information or unenroll


The IRS recently upgraded the Child Tax Credit Update Portal to enable families to update their bank account information so they can receive their monthly Child Tax Credit payment. The tool also allows families to unenroll from the advance payments if they don’t want to receive them. The Update Portal is available only on IRS.gov.

Any updates made by August 2 will apply to the August 13 payment and all subsequent monthly payments for the rest of 2021. Families will receive their July 15 payment by direct deposit in the bank account currently on file with the IRS.

People without current bank account information can use the online tool to update their information so they can get the payments sooner by direct deposit. Those who are not enrolled for direct deposit will receive a check.

How to update direct deposit information
First, families should use the Child Tax Credit Update Portal to confirm their eligibility for payments. If eligible, the tool will also indicate whether they are enrolled to receive their payments by direct deposit.

If so, it will list the full bank routing number and the last four digits of their account number. This is the account that will receive their July 15 payment.

If they choose, they can change the bank account receiving the payment starting with the August 13 payment.  

If the Update Portal shows a family is eligible to receive payments but not enrolled to receive them by direct deposit, they will receive a mailed check each month. If they want to receive their payments by direct deposit, they can use the Update Portal to add their bank account information.  Couples who are married and file jointly must both update their bank account information the same day to the same account to continue getting joint payments.

Any family receiving checks should consider switching to direct deposit to access their money quicker. Direct deposit removes the time, worry and expense of cashing a check, and eliminates the chance of a lost, stolen or undelivered check. People who don’t have a bank account can visit the Federal Deposit Insurance Corporation website for details on opening an account online or use the FDIC’s BankFind tool to locate an FDIC-insured bank. BankOnAmerican Bankers AssociationIndependent Community Bankers of America, and the National Credit Union Administration have lists of banks and credit unions that can open an account online.

Families can stop payments anytime
Even after payments begin, families can stop all future monthly payments by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their child tax credit as a lump sum when they file their 2021 federal income tax return next year. To stop all payments starting in August and the rest of 2021, they must unenroll by August 2, 2021.

Who should unenroll?
Some families may prefer to receive the entire credit as a refund when they file their 2021 return. The portal’s unenroll feature can also be helpful to any family that no longer qualifies for the child tax credit or believes they will not qualify when they file their 2021 return. Married filing joint taxpayers both need to unenroll. If one spouse does not unenroll, they will get half of the joint payment they were supposed to receive with their spouse.

For more information about the unenrollment process, including deadlines, see Topic J of the Child Tax Credit FAQs on IRS.gov.

The IRS will add more features to the Child Tax Credit Update Portal through the summer and fall. Soon people will be able update their mailing address. By fall, people will be able to use the tool to update changes to family status and income. More information is on the Advance Child Tax Credit Payments in 2021 page of IRS.gov


Share this tip on social media — #IRSTaxTip: The Child Tax Credit Update Portal allows families to update direct deposit information or unenroll. https://go.usa.gov/x6zFa
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IRS readies nearly 4 million refunds for unemployment compensation overpayments

WASHINGTON – The Internal Revenue Service announced today it will issue another round of refunds this week to nearly 4 million taxpayers who overpaid their taxes on unemployment compensation received last year.

The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.

Refunds by direct deposit will begin July 14 and refunds by paper check will begin July 16. The IRS previously issued refunds related to unemployment compensation exclusion in May and June, and it will continue to issue refunds throughout the summer.

To ease the burden on taxpayers, the IRS has been reviewing the Forms 1040 and 1040SR that were filed prior to the law’s enactment to identify those people who are due an adjustment. For taxpayers who overpaid, the IRS will either refund the overpayment, apply it to other outstanding taxes or other federal or state debts owed.

For this round, the IRS identified approximately 4.6 million taxpayers who may be due an adjustment. Of that number, approximately 4 million taxpayers are expected to receive a refund. The refund average is $1,265, which means some will receive more and some will receive less.

Most taxpayers need not take any action and there is no need to call the IRS. However, if, as a result of the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return.

Taxpayers should file an amended return if they:

  • did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after the unemployment compensation exclusion;
  • did not submit a Schedule EIC with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after the unemployment compensation exclusion;
  • are now eligible for any other credits and/or deductions not mentioned below. Make sure to include any required forms or schedules.

Taxpayers do not need to file an amended return if they:

  • already filed a tax return and did not claim the unemployment exclusion; the IRS will determine the correct taxable amount of unemployment compensation and tax;
  • have an adjustment, because of the exclusion, that will result in an increase in any non-refundable or refundable credits reported on the original return;
  • did not claim the following credits on their tax return but are now eligible when the unemployment exclusion is applied: Recovery Rebate Credit, Earned Income Credit with no qualifying dependents or the Advance Premium Tax Credit. The IRS will calculate the credit and include it in any overpayment;
  • filed a married filing joint return, live in a community property state, and entered a smaller exclusion amount than entitled on Schedule 1, line 8.

Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.

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