An estimated 1.2 million tax returns filed in 2007 reported wages earned by taxpayers who used another taxpayer's Social Security number, according to a new government report.
Many tax returns are filed by individuals who have used another person's name and Social Security number at work, but then filed federal returns using their own names and assigned individual taxpayer identification numbers. This often occurs with illegal immigrants. But when collection actions are taken on the account of the legitimate holder of the Social Security number, tax complications can occur for both the legitimate holder and the individual who used another person's Social Security number.
A new report by the Treasury Department's Inspector General for Tax Administration found that the Internal Revenue Service cannot currently identify such identity theft cases. TIGTA conducted a review when it learned that individuals using another person's Social Security number at work had their wages attached by the IRS to satisfy a tax debt associated with the tax accounts of the legitimate holders of the Social Security number.
ITINs are intended to provide tax identification numbers to resident and nonresident alien individuals, but do not change an individual's immigration status.
TIGTA assessed whether the IRS has procedures to effectively handle collection issues related to ITINs. It found that the IRS lacks internal guidelines for its employees to follow to assist either the taxpayer whose wages are being attached or the legitimate holder of the Social Security number (who may be the victim of identity theft).
TIGTA recommended that the IRS alert taxpayers that their identity may have been compromised; match ITIN returns with their related reporting returns, such as Wage and Tax Statements (Form W-2); and update guidelines to handle collection issues associated with ITINs. The IRS generally agreed with the recommendations.
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