Identity Thieves Safe Despite False Tax Returns

The Internal Revenue Service figures about 1.2 million tax returns are filed by taxpayers using other people's Social Security numbers. But IRS officials have few ways of warning the unwitting victims of identity theft.

A recent report by the Treasury Inspector General for Tax Administration for the year 2007 said that many of these returns are filed by undocumented immigrants who used their own names and assigned Individual Taxpayer Identification Numbers in filing returns, but appropriated other people’s names and Social Security information at their jobs. The practice is illegal and can cause serious tax headaches for people whose data is misused, the agency said.

“This report reveals a very troubling situation,” said TIGTA Inspector General J. Russell George in a statement. “The IRS must take steps to ensure that innocent taxpayers are notified when there is evidence that their identity has been compromised. When the IRS is in a position to notify victims of the theft of their identity, it should do so without fail.”

Fixing the problem will call for an overhaul of current practices, because the IRS can spot the discrepancies only after the fact, and doesn’t have a good way to warn possible identity theft victims. It falls to victims to refute their tax liability on other income, and requires extensive documentation.