IRS Documented 1.3M Identity Thefts by Illegal Aliens; Can’t Say It Referred Any for Prosecution

Terence P. Jeffrey, CNS News, March 16, 2018

The Internal Revenue Service in 2011 through 2016 documented more than 1.3 million cases of identity theft perpetrated by illegal aliens whom the IRS had given Individual Taxpayer Identification Numbers (ITIN), which are only given to people who are ineligible to work in the United States or receive Social Security Numbers, according to information published by the Treasury Inspector General for Tax Administration (TIGTA).

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TIGTA, which is the inspector general responsible for overseeing the IRS, discovered another approximately 1.2 million cases in 2017 in which an illegal alien working in the United States had filed a tax return reporting wages that had been earned using a Social Security Number that belonged to someone else or was fabricated.

Yet the IRS also could not say whether it referred any of these cases for criminal prosecution.

Using a stolen or fake Social Security Number is a felony.

“The Social Security Act,” TIGTA has noted, “provides that whoever, with the intent to deceive, falsely represents a number to be his or her SSN when, in fact, that number was not assigned to that person, shall be guilty of a felony and subject to a fine, imprisonment, or both. This includes using a false SSN to obtain employment.”

When processing individual tax returns, according to reports filed by TIGTA, the IRS ordinarily encounters two types of identity theft. One involves what TIGTA calls “refund fraud” and the other involves “employment-related fraud.”

In cases of refund fraud, the “identity thief” uses another person’s Social Security Number and personal identification information “to file a fraudulent tax return, reporting fictitious wages and withholdings and obtains a tax refund.”

“Cases of employment identity theft identified by the Internal Revenue Service usually involve an Individual Taxpayer Identification Number (ITIN) filer who used the Social Security Number of another individual, i.e. victim, to gain employment,” TIGTA said in a report released in February.

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The approximately 1.3 million cases of employment-related identity theft documented and recorded by the IRS in 2011 through 2016, involved foreign nationals whom the IRS had given Individual Taxpayer Identification Numbers (ITINs).

So, too, did the approximately 1.2 million cases of illegal aliens using Social Security Numbers that belonged to someone else or had been fabricated that TIGTA discovered in 2017.

The numbers of these cases were cited in the TIGTA report released last month. It was entitled, “Most Employment Identity Theft Victims Have Not Been Notified That Their Identities Are Being Used by Others for Employment.”

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A January 2004 TIGTA report said: “The IRS Office of Chief Counsel determined that, ‘the group of persons with United States federal tax obligations who are not eligible to obtain an SSN is limited to non-citizens who either do not reside in the United States or reside here illegally.”

In 1999, TIGTA released a report warning that with its ITIN program the IRS had embraced a policy to “‘legalize’ illegal aliens” that “increases the potential for fraud.”

In a follow-up report in 2004, TIGTA concluded that ITIN holders who filed tax returns using a Social Security Number were in fact illegal aliens.

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The IRS’s Criminal Investigation division publishes an annual report stating how many “prosecution recommendations” it makes each fiscal year and the crimes for which it makes them. In the six fiscal years from 2011 through 2016, according to these reports, IRS CI made 20,986 prosecution recommendations and 4,329 of them were for identity theft cases.

If everyone one of these identity theft prosecution recommendations had been for a case of employment identity theft—rather than refund-fraud identity theft—that would have equaled 0.3 percent of the 1,346,485 ITIN-holder cases the IRS documented in those years.

Similarly, in fiscal year 2017, when TIGTA discovered 1,227,579 tax returns filed by ITIN holders that included W-2s with “over 1 million valid” SSNs on them, IRS CI made only 403 prosecution recommendations in identity theft cases.

On its website, the IRS has posted 369 examples of successful identity theft investigations that IRS CI conducted and recommended for prosecution in fiscal years 2015, 2016 and 2017. But only five of the 369 examples mention the ITIN and each of these five describe a scheme to engage in refund fraud not employment-related fraud. {snip}

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