IRS observes millions of cases of identity theft, does nothing

You probably don’t want to get call from the IRS. Except maybe when an illegal immigrant has stolen your Social Security number, in which case you probably won’t.

IRS officials knew for at least 5 years that more than a million American Social Security numbers had been stolen by illegal immigrants—but the agency never bothered to notify the identity theft victims.

That’s according to a report from the Treasury Inspector General for Tax Administration (TIGTA), which pointed out that it first notified the IRS of the problem back in 2011.

From the watchdog:

The IRS’s Automated Underreporter (AUR) program identifies such discrepancies when it matches taxpayer income reported on third-party information returns (e.g., Forms W-2, Wage and Income Statement) to amounts that taxpayers report on their individual income tax returns.

TIGTA conducted this audit to evaluate the IRS’s AUR processes to identify and assist victims of identity theft. In July 2011, TIGTA reported that the IRS was in a unique position to identify cases of employment-related identity theft. TIGTA recommended that the IRS implement procedures to timely alert taxpayers when it becomes aware that their identity was stolen. However, in this review, TIGTA determined that taxpayers are still not notified.

During the period February 2011 to December 2015, the IRS identified almost 1.1 million taxpayers who were victims of employment-related identity theft. In April 2014, the IRS started a pilot initiative to begin notifying taxpayers that they may be a victim of employment-related identity theft. TIGTA’s review of the pilot notification initiative found that the IRS did not sufficiently design the pilot to include a representative sample of employment-related identity theft victims.

Further, TIGTA found that the IRS has not established an effective process to ensure that it sends the required notice to alert the SSA of earnings not associated with a victim of employment-related identity theft. TIGTA’s review of a statistically valid sample of 71 cases from the population of 1,878 Tax Year 2013 AUR cases closed as identity theft (i.e., cases that involved a discrepancy related to wages reported on the tax return) identified that the SSA has no record of receiving an IRS notice for 15 (21 percent) of the 71 cases.

According to the IRS, its biggest reason for not notifying citizens of the identity theft and going after the illegal immigrant culprits is that it would rather the criminals be taxpayers than not.

“If people … think the fact that they file with us means they’re now in jeopardy, a lot of them are going to quit filing with us,” he said.

He added, “What we can’t afford to do is have people feel, ‘If I pay my taxes to the IRS, they’re going to quickly check with immigration, they’re going to check with social security, they’re going to check with everybody,’ and even if they are here legitimately, a lot of times they’re uneasy about dealing with authority.”


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