Identity Theft and Rejected Returns: Using the IRS IP PIN in Your Client Process

Few things derail a clean filing calendar like an identity-related rejection. You are ready to e-file, the client is expecting confirmation, and then the acknowledgement comes back: the IRS already received a return under that SSN or ITIN, or the return needs an Identity Protection PIN.

For a CPA or accounting firm, this is not just an inconvenience. It creates a chain reaction: extra client calls, urgent document requests, rework inside the file, and delays that can spill into extensions. More importantly, it can shake client trust at exactly the moment they want reassurance.

That is why the IRS Identity Protection PIN (IP PIN) program is worth building into your standard operating process, not as a niche tool, but as a practical safeguard you can offer clients who want extra protection. The IRS describes an IP PIN as a six-digit number known only to the taxpayer and the IRS that helps prevent someone else from filing a tax return using the taxpayer’s SSN or ITIN.

What an IP PIN actually does in real life

An IP PIN is not a credit monitoring service and it does not stop all fraud. What it does is very targeted and very useful: it adds a required identity key to the filing process. If a taxpayer has an IP PIN and the return is filed without it, the IRS can reject the e-file or delay processing, which is exactly why firms must handle it carefully once a client is enrolled.

In other words, the IP PIN is both a shield and a gate. It helps stop fraudulent filings, but it also creates a dependency: you need the correct IP PIN for the return to flow smoothly.

Who should consider an IP PIN

A decade ago, IP PIN use was often associated with taxpayers who had already experienced identity theft. Today, the IRS makes the program available more broadly, and many clients now ask proactively.

In firm terms, the best candidates tend to be:

• Clients who have experienced identity theft, data breaches, or prior IRS issues
• High-income or high-visibility clients who want an extra layer of protection
• Clients who file early and want to reduce the odds of someone filing first
• Clients whose personal data is frequently shared across multiple parties (multiple K-1 sources, investment platforms, multi-entity structures)

Even clients without a filing requirement can still use an IP PIN to protect their IRS account, which is a useful point to include in client education.

Where firms get tripped up: the operational side

Most problems are not technical. They are process-related.

Clients forget they enrolled. A spouse has an IP PIN but the primary taxpayer does not. A dependent has an IP PIN and the preparer misses it. The client cannot find the annual notice. Or the client tries to retrieve the IP PIN in the middle of the IRS maintenance window and panics.

The IRS specifically notes that the IP PIN retrieval feature is unavailable during an annual maintenance period, and it publishes the window when that occurs. That detail matters because it helps you set expectations and avoid last-minute scramble.

How to bake IP PIN into your organizer and intake flow

When you treat IP PIN like “one more question,” it gets missed. When you treat it like a standard intake checkpoint, it becomes routine.

What works well in practice is adding a short “Identity Protection” section to your organizer:

• Does anyone on this return have an IRS-issued IP PIN this year?
• If yes, list the IP PIN for taxpayer, spouse, and each dependent who has one
• If you cannot locate it, confirm whether you received a CP01A notice or need to retrieve it through the IRS online account

Then reinforce it with one internal rule: if a client indicates they have an IP PIN, the return does not move into “ready to e-file” until the IP PINs are validated for every applicable person on the return.

This is the same reviewer-first logic your team already uses for missing K-1s or unsigned authorizations: do not let preventable blockers reach the end of the pipeline.

A clean client script to reduce confusion

Your client messaging needs to be short and confident, because “PIN” language gets confused with other e-file PINs or prior-year AGI verification.

A simple explanation aligned to the IRS definition is enough:

• An IP PIN is a six-digit number that helps prevent someone else from filing a tax return using your SSN or ITIN.
• If the IRS assigned you an IP PIN, it must be entered on your tax return.

Both points map to the IRS guidance clients can reference.

When you communicate this well, you reduce back-and-forth and keep the process calm, which is exactly what clients value when anything security-related comes up. As one Finsmart client put it, “Their communication was steady, their execution was thorough.”

What to do when a return rejects due to identity issues

The IRS has a dedicated page for tax professionals outlining identity theft signals, including e-filed returns rejecting because another return was received using the client’s SSN. That single bullet describes a large share of the “why did my return reject?” cases firms see.

Operationally, the response should be consistent:

• Confirm whether the taxpayer already has an IP PIN (or needs one)
• Determine whether the rejection is an IP PIN issue versus a duplicate filing issue
• Set client expectations on timeline and documentation requirements
• Keep a clear paper trail inside the workpapers so the reviewer can sign off confidently

The key is not to improvise. Your team should have a small “rejection playbook” that covers: who contacts the client, what you request, where you log it, and what the resubmission path is.

Timing reality: the maintenance window and “don’t wait until the deadline”

One of the most practical tips you can give clients is to retrieve or confirm IP PIN access well before the final filing push. The IRS publishes that the IP PIN retrieval service can be unavailable during an annual maintenance period and instructs taxpayers to check back in January when applicable.

That means your process should include a seasonal reminder:

• Early January: confirm IP PIN status for returning IP PIN clients
• During the maintenance window: focus on documenting who is impacted and what the contingency plan is
• Before your internal cutoff: require IP PIN confirmation for any client who has one

This prevents last-minute stuck returns in late March or early October.

Where an embedded tax seat helps without adding risk

IP PIN handling is a great example of work that is important, repeatable, and easy to standardize:

• intake checks
• organizer follow-ups
• tracking who has an IP PIN
• validating that the IP PIN fields are completed before the return enters the e-file queue
• documenting the “ready to file” gate

Those tasks do not require partner-level judgment, but they do require consistency. That is why many firms assign this to a dedicated operations lane. With an embedded model, the same dedicated team members can run that lane inside your tools and checklists.

That “embedded” feel matters. As one client shared, the Finsmart team “has always felt like a part of our team.” Another noted that the team “integrates seamlessly into our operations” and is “diligent, proactive.”

If your firm is already using a dedicated capacity model, this fits naturally into an Accounting Seat Model approach, and for tax-season execution, it aligns well with dedicated US Tax Seats that support CPA and accounting firms with structured prep and coordination work.

Bringing it all together in a way clients appreciate

Identity-related issues are emotional for clients. They want reassurance, not jargon. They want to know you have a process, and that their data is handled with care.

When you standardize IP PIN intake and create a simple gate before e-file, you reduce rejected returns, reduce fire drills, and send a signal of professionalism. It creates the kind of confidence Susan Cook described: “I felt confident every step of the way.”

If you want a ready-to-use IP PIN organizer section, a short client email template, and an internal “e-file readiness” checklist your team can adopt, email [email protected] and mention “IP PIN workflow.”