@Opus 17 wrote:
It is not mandatory. However, it may be beneficial to you in the long run.
If you report the identity theft, the IRS will assign a 6 digit IP-pin (identity protection pin) that you must use to file your tax return. This is in addition to the 5 digit e-file pin. Your IP pin changes every year and is mailed to you at tax season. You can't e-file without it, and if you paper file and don't write your IP pin on the paper form, the IRS will delay your refund to verify your identity.
What I should have added here is that, without the IP PIN, no one else can file a return in your name even if they have your SSN. If 2 returns are filed in your name, the IRS will probably eventually figure out who the real you is and pay the refund, but the IP PIN is a strong way to prevent anyone from filing a false return in your name.
The downside is you need the IP PIN every year from now on. There is a web site to retrieve it if you lose the letter from the IRS in December.
