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Equifax Data Breach: Protect yourself from tax fraud by getting a PIN from the IRS

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Clark Howard Staff, Clark.com

One detail that’s truly alarming about Equifax data breach is the fact that Social Security numbers were among the trove of data hackers gained accessed to when they broke into the company’s computer system. That means that tax-filing season is going to be especially fraught this year because of the higher risk of fraudulent returns.

As many as 143 million consumers — or two-thirds of all Americans with credit reports — may have had their personal information exposed, the company said in a September 8 announcement.

Money expert Clark Howard says that as a result of the dangers, the Internal Revenue Service is taking a hard line on tax refunds this year as a precaution — and that may mean arduous delays in getting your returns.

“The tax system could be extremely vulnerable for filing this year’s returns starting in January next year where the criminals will be able to sneak through and file false returns as if they’re you, which means any refund that you’re going to expect, you’ll have to wait 10 to 14 months to receive, and… that is crazy.”

Some Americans can get an Identity Protection PIN from the IRS

To put it another way, imagine that come tax time that you file your return and eagerly await the money that’s owed back to you — only to find out that said money won’t be arriving anytime soon, not even in the same calendar year.

You may be saying to yourself, “Wait a minute, I should be protected. I put a freeze on my credit. I also signed up for free credit monitoring.” The problem is that the crooks can still commit tax-related identity theft because although they won’t be able to open any new lines or credit, they presumably could still access your key-identifying information (like your Social Security number) and siphon funds meant for you to them.

The IRS has come up with a safeguard that can stop fraudulent tax filers. It’s a six-digit number called an Identity Protection PIN (IP PIN) and it’s currently only available to residents of Georgia, Florida and Washington, D.C.

“With that PIN, you won’t have to worry about someone filing a return as if they’re you because they won’t have your IRS filing pin,” Clark says.

Listen to Clark explain the IRS’s Identity Protection PINs

Important: The IRS says once you get assigned an IP PIN, you’ll have to use it to confirm your identity on all federal tax returns going forward.

Here’s how to get your IRS pin, as explained on the agency’s website:

To register, you need:

  • Your Social Security number, date of birth, filing status and mailing address from your latest tax return,
  • Access to your email account,
  • Your credit card number or account number from a car loan, mortgage, home equity loan or home equity line of credit, and
  • A mobile phone with your name on the account.

To get an IP PIN, you must:

The irony of all this is that if you’ve enacted a credit freeze with Equifax, you’ll have to contact them in order to protect yourself with a PIN. The IRS will need the freeze temporarily thawed so that the agency can verify your identity. When registration is complete, you can refreeze your credit.

Once you’ve secured your PIN, you should be good to go, right? Not necessarily. Clark says that getting a PIN is only the first of two steps consumers need to complete to really protect themselves from tax-related ID theft.

“The other thing you should do is reduce your withholding at work so that you’re not expecting a big refund next year, that you might have to wait 10 to 14 months for anyway,” he says.

RELATED: 15 red flags that will get you audited by the IRS

RELATED7 really bad tax scams that you need to be aware of

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