Client Letter: IRS Account And IP PIN Recommendation

Tax Check List
August 14, 2021

Hello Client,

I hope you are enjoying the summer and staying cool. It seems wherever you live, it is hot! Hopefully relief is on the way.

While taxes may not be on your mind, we are about six months from when the first 2021 tax returns can be filed. Now would be a good time to act on recent IRS customer service improvements. This email recommends that you create an online account using the IRS’ new customer account page and opt into the IRS Identity Theft IP PIN program.

IRS Online Account Now Available

You probably have heard how difficult it is to call the IRS. There are reports that callers may wait on hold for hours, only to have their calls dropped without speaking to anyone or even have the opportunity to leave a voice mail. The agency’s technology is antiquated by most business standards and doesn’t allow agents and customer service employees to work from home. Due to COVID restrictions and social distancing, only about half of the customer service staff are allowed into the service centers for each shift.

On the other hand, the IRS IT department has had an easier time making improvements. One of the most important accomplishments was releasing a customer-focused web portal similar to what you experience at your bank or investment management company. Last month the IRS introduced an Online Account web page where you can access information that formerly required a phone call.

With your online account, you can view:

  • The total amount you owe, including balance details by year
  • Your payment history and any scheduled or pending payments
  • Essential information from your most recent tax return
  • Payment plan details, if you have one
  • Digital copies of select notices from the IRS
  • Your Economic Impact Payments, if any
  • Your address on file

You can also:

  • Make a payment online
  • Access the Child Tax Credit Update portal to add or delete dependents, or opt-out of advance payments
  • See payment plan options and request a plan via Online Payment Agreement
  • Access your tax records via the Get Transcript app
  • Approve or reject authorization requests from tax professionals
  • Use your account to set up an IP PIN.

Setting Up an IRS Account Requires Patience

The system is not perfect. The online portal, or customer service agents who answer the phones, cannot tell taxpayers when they will receive their 2019 and 2020 refunds that were delayed for additional manual processing. That information is in paper documents that IRS processors must review.

The IRS has intentionally created several identity verification steps that may require extra time to obtain your online account. Since it could take up to two weeks for the IRS to authorize your account, you should set up your account before you need it.

I wrote an article that includes the signup steps and documents you will need to create your IRS Online Account. Click on IRS Improves Online Access To Your Information to access my blog page.

You can also go directly to the IRS online home page to create your account.

What Else Should You Know?

  • You have an online account if you ever created an online account to access your tax transcripts in the past. Use the link above to access the IRS log-in page. There are links on the log-in page in case you forgot your password or user id.
  • Both you and your spouse should register for accounts. The IRS maintains separate accounts for each spouse, even if you file married filing jointly.
  • Currently, you cannot change your address online. Submit Form 8822 by mail when you change addresses.
  • You can change your email address and phone number.
  • You cannot use the online account portal to make estimated tax payments. You should continue to use the IRS Direct Pay page for estimated tax payments until this feature is added to the IRS Account page.
  • Electronic payments may take five to seven business days to appear on the portal’s payment activity screen. Allow three weeks for non-electronic payments to be credited to your account.

The IRS Identity Theft Protection Program

A significant problem in recent years for taxpayers has been identity theft. When hackers steal your identity information, they often obtain your Social Security number and birth date. It is easy to create a fake tax return with a directly deposited refund into the criminal’s bank account with that information using your contact information. This type of fraud is committed in the days after the IRS opens the e-File system for tax returns. Since most taxpayers need to wait for all their tax documents, the successfully e-filed fraudulent tax return is not discovered until later in the tax season. The second tax return filed under the real taxpayer’s Social Security number will be rejected by the e-file system. At that point, the IRS has a lengthy process to identify the real taxpayer and accept the correct return.

The IRS has instituted a series of internal checks that have reduced the number of accepted fraudulent returns. Still, every year many taxpayers find themselves in a situation where their tax returns are not accepted.

In the past, fraud victims were automatically entered into the Identity Protection PIN (IP PIN) program to prevent future identity theft issues. In 2021, the IRS opened up the program to all taxpayers to prevent future tax return fraud.

I added a blog entry on my website that describes the program: Protect Yourself From Tax Fraud With An IP PIN. To obtain the IP PIN, you will need to have an IRS account, and every year you will need to access your IP PIN page to obtain a new number. Once you Opt-In the IP PIN program, you cannot Opt-Out. The IRS has promised to create an Opt-Out process in the future.

Let me know if you have any questions or need help as you review the process.

Best regards,

Mark Schwanbeck, EA