Federal Tax Returns and Identity Theft?

A common practice of individuals who are working in the US without valid work authorization is to use another tax payer's Social Security Number to secure employment, and then to file end of year income tax returns using their Individual Tax Payer Identification Number.

The IRS has identified 1.2 million 2007 Federal income tax returns where the scenario above appears to have been the case according to a report released by the Treasury Inspector General for Tax Administration (TIGTA). Of real concern is the instances where the valid SSN holder doesn't know that their number is being used, as the IRS has no mechanism for advising the true account holder of the possible identity theft.

The report concluded:

"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,� said J. Russell George, the Treasury Inspector for Tax Administration. “When the IRS is in a position to notify victims of the theft of their identity, it should do so without fail."

To view the report, including the scope, methodology, and full IRS response, go to: http://www.treas.gov/tigta/auditreports/2010reports/201040040fr.pdf.