Imagine working hard all year, preparing to file your tax return, only to discover that your identity has been stolen, your refund has vanished, and you now owe unexplained tax debts. This scenario is not hypothetical—tax-related identity theft is on the rise. How can you protect yourself from becoming the next victim?

The Internal Revenue Service (IRS), in collaboration with the Security Summit, has introduced comprehensive solutions to enhance tax security. By leveraging tools such as Multi-Factor Authentication (MFA), Identity Protection PINs (IP PINs), and IRS online accounts, taxpayers can build robust defenses to safeguard their identities and finances.

Multi-Factor Authentication (MFA): A Critical Shield for Tax Professionals

In the digital age, cybersecurity threats are omnipresent. For tax professionals handling sensitive client information, robust security measures are non-negotiable. Multi-Factor Authentication (MFA) serves as a vital shield, fortifying account security.

  • FTC Mandate: Under the Federal Trade Commission's (FTC) Safeguards Rule, all tax professionals are required to implement MFA to protect client data. This is not just a best practice—it is a legal obligation.
  • Layered Security: MFA requires users to provide additional verification beyond a username and password. These factors may include:
    • Knowledge-based: Passwords or security question answers.
    • Possession-based: Verification codes sent to a mobile device or generated by a token.
    • Inherence-based: Biometric identifiers such as fingerprints or facial recognition.
  • Thwarting Attacks: MFA effectively counters phishing and social engineering attempts. Even if passwords are compromised, unauthorized access is prevented.
  • Best Practices:
    • Enable MFA for all services and data access points.
    • Regularly update MFA methods and technologies.
    • Offer multiple authentication options to accommodate user preferences.
    • Activate MFA in tax preparation software and cloud storage services.
    • Never share usernames or credentials.

Tax professionals must protect client data stored on computers, networks, and within tax software. Compliance with MFA requirements is a legal obligation for all businesses, regardless of size. Failure to implement MFA in tax preparation software violates the FTC Safeguards Rule.

Identity Protection PIN (IP PIN): A Personal Tax Security Tool

The Identity Protection PIN (IP PIN) is a free service offered by the IRS to help taxpayers prevent tax-related identity theft. This six-digit code acts as a secret key, ensuring only the legitimate taxpayer can file under their name.

  • Annual Updates: The IP PIN is valid for one calendar year, with the IRS issuing a new code annually to maintain continuous protection.
  • Voluntary Enrollment: While optional, the IRS strongly encourages all taxpayers to enroll, particularly those who have previously experienced identity theft.
  • Strict Verification: Only taxpayers who pass IRS identity verification can obtain an IP PIN, preventing misuse by fraudsters.
  • Confidentiality: IP PINs must never be shared, except with trusted tax preparers. The IRS will never request an IP PIN via phone, email, or text.
  • Tax Preparer Limitations: Tax professionals cannot apply for an IP PIN on behalf of clients. Taxpayers must personally request one through the IRS website.
  • Identity Theft Victims: Confirmed victims of identity theft will automatically receive an IP PIN each year without reapplying.

IRS Online Accounts and Tax Pro Accounts: Secure Tax Management Platforms

Beyond IP PINs, the IRS provides online tools to help taxpayers and professionals manage tax matters securely and efficiently.

IRS Online Account

  • Secure Access: View tax records, including past returns, payment history, and estimated tax payments.
  • Fraud Prevention: Establishing an IRS online account deters criminals from creating fraudulent accounts in your name.
  • Information Sharing: Safely share tax details with authorized professionals.

Tax Pro Account

  • Client Authorization Management: Tax professionals can securely manage client authorizations, ensuring only approved individuals access sensitive data.
  • Streamlined Requests: Submit authorization requests directly to client IRS accounts.
  • Support for Legal Delegation: Facilitates Power of Attorney and Tax Information Authorization requests.

Security Summit and National Tax Forums: Collaborative Efforts for Tax Security

The "Protect Your Clients; Protect Yourself" summer campaign is part of the Security Summit's annual educational initiative. This public-private partnership, established in 2015, unites tax professionals, industry stakeholders, state agencies, and the IRS to combat tax-related identity theft and fraud.

Security remains a focal point at the National Tax Forum, held annually across five U.S. cities. In addition to educational news releases, tax professionals can attend continuing education sessions addressing security challenges. Upcoming forums are scheduled for August 26 in Orlando, September 9 in Baltimore, and September 16 in San Diego.

The IRS reminds tax professionals that registration deadlines for some forums are approaching, with limited availability.