In response to a tide of tax fraud and identity theft, the IRS has implemented new tax return safeguards in 2017 and expanded others in an effort to minimize these risks. Some states have also added security measures to their own income tax return processes.
While these safeguards are meant to protect you from fraud, they may also require you to do a bit of extra work this tax season. Read on to see what the IRS expects from you.
W-2 verification code
Your W-2 forms for 2016 may include a 16-character verification code. If you file taxes online or use a tax software package, then you should enter your W-2 verification code when the program asks you for it. You won't need to include the code if you fill out your tax returns the old-fashioned way (on paper).
If you forget the code or your W-2 form doesn't have one, your 2016 return will still be accepted without it. The verification code program is still in testing mode, with only about 50 million W-2s sporting a code this year, up from 2 million for the 2015 tax year. However, in future years, the verification code may be required to process your return electronically.
Delayed refunds for returns with certain tax credits
If you claim the Earned Income Tax Credit or the Additional Child Tax Credit on your 2016 return, any refund you're due is likely to be delayed. The PATH Act requires the IRS to hold refunds for tax returns claiming either or both of these credits until Feb. 15. The IRS warns that while it will start issuing refunds on Feb. 15, taxpayers probably won't receive the funds until the week of Feb. 27, and that's if everything goes smoothly while they're processing the return.
State security measures
Several states now require a driver license number on tax returns filed online or through a software program. If you don't have a driver license, you can use your state-issued ID card number instead. And for most state returns that ask for a driver license number, it's optional rather than required. However, if the tax program you're using insists on a number and you can't or won't provide one, try typing all zeroes in the field and see if the program will let you move on at that point. Check with your state tax office to find out if your state will be requiring a license number for its tax returns.
The Identity Protection Personal Identification Number (IP PIN)
The IRS is assigning certain taxpayers a special six-digit code known as the IP PIN. The idea is to add a further layer of protection for taxpayers who have already suffered from identity theft or who may be at risk. But you can't just order an IP PIN, even if you've been a victim of identity theft; the IRS decides who gets the code and will send an invitation to taxpayers who qualify. The exception to the no-order rule would be anyone who filed last year as a resident of Florida, Georgia, or the District of Columbia; these lucky folks can request an IP PIN as part of an ongoing pilot program. Once you're assigned an IP PIN, the IRS will send you a new one each year, and you're required to include it on your tax return. For more information on this program, see the IP PIN FAQ page.