Return Rejected for Missing IP (Identity Protection) PIN Still Triggered Running of Limitations Period

10 September 2020

The Code Sec. 6501(a) limitations period for assessing an individual’s tax return expired before a notice of deficiency was issued by the IRS. The IRS had rejected the taxpayer’s first submission of his electronically signed federal income tax return for the tax year at issue, for failure to provide a valid Identity Protection Personal Identification Number (IP PIN) with the efiled return. The court ruled that an IP PIN was not required to start the limitations period.

The taxpayer e-filed the first submission of his Form 1040, and e-signed Form 8879, IRS e-file Signature Authorization, to authorize an accountancy firm to file a return as an electronic return originator (ERO) on his behalf. The IRS’s software rejected the taxpayer’s first submission of his Form 1040 for failure to include an IP PIN. After a second unsuccessful submission, the taxpayer obtained an IP PIN from the IRS and included it in the third submission of his return. Except for the IP PIN, the tax information in third submission was identical to the information in the first and second submissions. The IRS’ software reviewed and accepted the third submission. The IRS issued a notice of deficiency for the tax year at issue within three years of the third submission.

IP PIN Not Part of Signature Requirement

For Code Sec. 6501(a) purposes, the taxpayer must execute the return in question under penalties of perjury. The IRS claimed that the first submission of the taxpayer’s document failed to satisfy the signature requirement because it did not include an IP PIN. The failure to provide an IP PIN on the taxpayer’s first submission did not put the return in the “tax protester” category. Further, no IRS guidance characterized an IP PIN as a signature.

The taxpayer justifiably relied on the IRS form and its instructions, which definitively identified the Self-Select PIN and the Practitioner PIN as the means of signing an electronic return, and the first submission included a Practitioner PIN. The IRS failed to explain why it automatically rejected an e-filed return, but not a paper return, without a correct IP PIN. The tax return in the first submission was delivered to the IRS’s Modernized e-File (MeF) system and was properly filed. The taxpayer satisfied all his duties to trigger the running of the statute of limitations with his first submission, and was therefore granted his motion for summary judgment.

R.J. Fowler, 155 TC —, No. 7, Dec. 61,748