However, it can also take some time to get an IP PIN, depending on whether you apply online, by mail or in person. (Ms. Collins' annual report says that some taxpayers may find the online process “burdensome.”) Taxpayers may have been reluctant to participate because previously, if they voluntarily applied for a PIN, they couldn't change their minds and opt out. But that's changed, the IRS website says. Unless you've been a victim of tax-related identity theft, you can now opt out of the PIN program.
Melanie Lauridsen, vice president of tax policy and advocacy at the American Institute of Certified Public Accountants, advises working with a reputable tax preparer and keeping your tax information well organized so you can file it early in the season. This will reduce the chance of filing a fraudulent return first. “Get it to the tax preparer well in advance,” she says.
Other measures, such as setting a fraud alert or security hold on your credit report, can also help protect sensitive information that can be used for identity theft.
How do criminals obtain personal data that they can use for tax fraud?
Data breaches or leaks, which have become alarmingly common, can expose sensitive information to identity thieves. In 2023, there were 3,205 publicly reported data breaches — at healthcare providers, cable and wireless companies, mortgage lenders and other companies — affecting more than 353 million people, a 78 percent increase from 2022, according to the Identity Theft Resource Center, a nonprofit that tracks breaches and helps victims. “They are the fuel for fraud,” said Eva Velasquez, the group's executive director.
In some cases, criminal networks are behind the data thefts. In a case brought in Texas last year, federal authorities charged seven people with fraudulently registering with the IRS as taxpayer representatives and obtaining personal information about taxpayers, which they then used to file hundreds of fraudulent tax returns and obtain illegal refunds. All seven have pleaded guilty to the charges.