Current and former federal government employees should secure an Identity Protection PIN from the IRS.
In June of 2015, the Office of Personnel Management (OPM) announced that it was the victim of a significant cyber intrusion that compromised personnel records of current and former federal employees. This data breach may also have affected the records of prospective government employees and others for whom a federal background investigation was conducted. The Washington Times indicated that two separate breaches were involved, and the intrusion could affect as many as 32 million Americans.
When an identity theft occurs that includes Social Security numbers, a possible result is that the perpetrators (or others to whom they sell the data) file a fictitious tax return early in the next tax filing season, which prevents the taxpayer from subsequently e-filing. This can lead to very lengthy delays in correcting the matter. As a solution, the IRS provides an Identify Protection PIN (or IP PIN) to victims (or potential victims) of ID theft, such as those affected by the OPM breach.
IRS identity protection PIN
We advise those who have their personal information in the OPM database to file IRS Form 14039, Identity Theft Affidavit, in order to secure an IP PIN for use in filing with subsequent income tax returns. We have prepared a short instruction document to assist those affected by the OPM breach in completing this form.
Spouses of current or former government employees should also file Form 14039, even when normally filing a joint return, because it is likely that the spouse’s name and SSN is within the OPM database.
If you secure an IP PIN, make sure you provide this identification number to your tax preparer to facilitate the secure filing of future federal income tax returns. You will receive a new IP PIN from the IRS for three consecutive Form 1040 tax return filings. If both spouses have secured an IP PIN, the tax return should disclose the IP PIN of the primary spouse (the first name and SSN listed in the joint return).
How the IP PIN works
Securing an IP PIN effectively “locks up” access to the taxpayer’s 1040 unless the PIN is submitted by the taxpayer and recognized by the IRS. Our experience has been that most of these IP PIN arrangements work seamlessly. But a small percentage of IP PIN filers encounter glitches within the IRS system, and effectively get into the same set of delays and communication hassles as if an identity theft had compromised their account. And due to the number of affected taxpayers, the IP PIN application process may be overwhelmed. Our advice, nevertheless, is to file for IP PIN protection; the risks of a fraudulent filing from the data breach appear to outweigh the risks of the IRS mishandling the IP PIN process.
Finally, OPM is in the midst of a program to notify government employees whose data has been identified as part of the security breach. Those who are notified should follow the additional steps recommended by OPM (e.g., obtain credit monitoring).
How we can help
Cybercrime continues to be an evolving risk for both individuals and organizations. Here are some techniques to protect your personal financial information from being stolen. For those with a business or organization, we can help you develop defenses that may prevent cybercrime.