Client’s Guide to Preventing Tax Return Identity Theft: Set-up Your IRS IP PIN

From the perspective of your trusted accounting partner, we want you to understand the growing threat of tax-related identity theft, how it affects you personally or your organization, and what you can do to reduce the risk—starting with one of the IRS’s strongest tools: an Identity Protection PIN (IP PIN). An IP PIN is a six-digit code known only to you and the IRS that helps prevent someone else from filing a return using your SSN or ITIN.

What’s Happening With Identity Theft and Tax Returns
Tax-related identity theft occurs when someone uses a stolen SSN (or other taxpayer ID) to file a false federal tax return and claim a refund. The result: when you go to file your legitimate return, the Internal Revenue Service (IRS) may reject it because someone else already used your SSN. Unfortunately, this often happens well before you engage your preparer—through data breaches, phishing, stolen mail, or earlier misuse of your information.

How Big an Issue Is This for the IRS & Taxpayers?
This is a large and growing problem:

• For the 2024 filing season, the National Taxpayer Advocate’s office reported the IRS suspended processing of over 1.9 million tax returns pending identity verification.
• In a recent interim report, the IRS as of February 2023 had identified approximately 31,079 tax returns involving an estimated $310.7 million in claimed fraudulent refunds and prevented about $303.7 million (roughly 97.7 %) of those refunds.
• And the delays that taxpayers face are serious: victims of tax-related identity theft are waiting on average 22 months for their case resolution and refunds.

“These numbers show both the scale and the systemwide impact,” said Dan Fortman, CPA, managing partner at Weiss & Company LLP. “The delays, paperwork, and impact on your ability to secure a loan or mortgage can be frustrating. A few simple steps, including getting an IRS IP PIN, can go a long way toward ensuring your tax return process goes off without a hitch.”

Why & How This Is Happening – Fraudster Tactics
According to the IRS, fraudsters exploit vulnerabilities:

• They obtain your SSN, ITIN, or EIN via phishing emails, data breaches of employers or payroll vendors, stolen mail, or social engineering.
• Once they have the ID, they file a return early — sometimes before you do — claiming a refund. The IRS filters then flag these returns for review, leading to delays.
• Some schemes target businesses: stolen Employer Identification Numbers (EINs) used for fabricated W-2s, false payroll filings or business refund claims.

How This Impacts Taxpayers – More Than Just a Delay
When you become a victim of tax-related identity theft, the impact goes beyond waiting for your refund:

• Your e-filed return may be rejected because the IRS shows someone else filed using your ID. This forces you to file by paper, attach a Form 14039 (Identity Theft Affidavit) and wait.
• During that waiting period (often 18–24+ months), you may be unable to access transcripts, secure mortgage or loan applications, or receive timely refunds. The average processing time reported was about 675 days in some cases for resolution. (Source: Taxpayer Advocate Service)
• The burden also includes gathering documentation, responding to IRS letters (for example the “Letter 5071C” or “4883C” requiring identity verification), mailing paper returns, monitoring your credit, and coordinating with the IRS or a representative.
• Refund delays can also affect cash flow and financial planning — especially for taxpayers who rely on refunds tied to refundable credits.

What Can Taxpayers Do to Protect Themselves?
Here are practical steps you can take:

• Get an IRS IP PIN (strongly recommended). The IP PIN is a unique six-digit number used to verify your identity on your federal return, making it much harder for criminals to file a fraudulent return using your SSN/ITIN. The IRS generates a new IP PIN each year; if you opt in online, you generally retrieve it annually through your IRS online account. Start here to secure your PIN (IP-PIN). If you do not have an IRS account, you will first need create your IRS account (ID.me) account before creating your pin. For step by step instructions on creating your ID.me account read this article.
• File early. The earlier you file a legitimate return, the less chance a fraudster files first.
• Protect your personal identifiers. Safeguard SSNs, account credentials, and tax forms (W-2s/1099s). Avoid sending sensitive documents by unsecured email.
• Monitor accounts and mail. Be alert for IRS notices you didn’t expect, e-file rejections, unfamiliar W-2/1099 activity, or invalid employment records.
• For organizations: strengthen internal controls—secure storage of employee data, limited access, multi-factor authentication, employee phishing training, and monitoring for unusual payroll or tax-filing activity.

What Role Does an Accounting Firm Like Weiss Play?
As your accounting firm we play a critical defensive role, though we cannot eliminate every risk (because the theft often occurs before or outside our engagement). We:

• Advise on prevention, including IP PIN best practices and secure methods of document submission and communication.
• Watch for warning signs (for example, an e-file rejection indicating a duplicate filing or an IRS fraud-alert notice) and guide you through next steps.
• Support resolution if you become a victim, including helping you navigate IRS processes and documentation such as Form 14039 when applicable. Educate and prepare by monitoring evolving threats (cybercrime, data leaks, vendor breaches) and recommending protective measures before filing season begins.

In summary: Tax refund fraud driven by identity theft is a pervasive, system-wide issue. We can help you reduce risk, implement protective steps, and respond if you become a victim. We encourage you to act now: review your protection posture, enroll in the IRS IP PIN program, file early and securely, and contact Weiss tax advisor if anything seems suspicious.