A new report shows that nearly 1.2 million tax returns filed in 2007 may have been filed by criminals using someone else's Social Security number, according to the Treasury Inspector General for Tax Administration.
Tax returns filed under an Individual Taxpayer Identification Number or name and Social Security number are not flagged by the Internal Revenue Service as possible identity theft cases. Most criminals who file under another individual's Social Security number do so for employment purposes. Taxpayers who file using an ITIN are typically resident or illegal aliens who are not eligible to receive a Social Security Number.
Criminals are able to successfully file their taxes under another Social Security number due to flaws in the Internal Revenue Service system. When an employee receives their W-2 forms, an identical copy is sent to the IRS to allow them to match up the figures when employees file their taxes. Criminals who gain employment under another's Social Security number will have their income included in the tax file of the legitimate taxpayer, resulting in an automatic audit and notice to the taxpayer to pay on their unreported income, Money Watch reports.
It is imperative that taxpayers who receive notices for unrecognized income contact the IRS. This will allow them to correct the discrepancies on the taxpayer's file and list them as a victim of identity theft, Money Watch reports.
Criminals who do not file under their victim's Social Security number are able to circumvent detection and submit their tax information through an ITIN. Nearly 3 million taxpayers file under an ITIN, and of that number, 1.2 million are possible identity thieves, the report shows.
"This report reveals a very troubling situation. The IRS must take steps to ensure that innocent taxpayers are notified when there is evidence that their identity has been compromised," Tax Administration Treasury Inspector J. Russell George commented. "When the IRS is in a position to notify victims of the theft of their identity, it should do so without fail," George stated.
Tax season makes employees particularly vulnerable to identity theft as high volumes of tax and Social Security information are being transferred electronically and through the mail. Taxpayers should monitor their tax information prudently and report any discrepancies to the IRS.