Feds Ignore Illegal Alien ID Theft Plaguing Americans as U.S. Coffers Fill

The historic surge of illegal immigrants across America’s southern border is fueling a hidden crime spree few in Washington seem willing or able to address: widespread identity theft victimizing unwitting Americans perpetrated by migrants who need U.S. credentials to work.

An extensive review of government reports, think-tank research, news accounts, and interviews with policymakers and scholars suggests the problem involves millions of people – though measuring it with precision is difficult because of the lack of data provided by authorities.

A telling indication of the scope of the criminality is provided by a little-known government accounting book, the Social Security Administration’s Earnings Suspense File (ESF). It reflects the earnings of employees whose W-2 wage and tax statements have names and Social Security numbers that do not match official records. The total logged in the file has increased tenfold from $188.9 billion at the dawn of the millennium to $1.9 trillion in 2021.

Officials have historically ascribed a “high proportion” of the file’s growth to wages reported by illegal immigrants, and it has swelled alongside their population, which stands at a conservatively estimated 11.5 million today, 7 million of whom are employed. Among those doing so on the books, federal authorities have found that well over 1 million are using Social Security numbers belonging to someone else – i.e. stolen or “shared” with a relative or acquaintance – or numbers that are fabricated.

The data held in the ESF would enable authorities to pursue many of the fraudsters, but the IRS and other agencies responsible for enforcing the law have been reluctant to investigate, and regulations have prevented meaningful information-sharing among them.

This identity-related crime is providing a windfall for the U.S. government. A 2017 study from the conservative Federation for American Immigration Reform found that the federal government collects about $22 billion annually in tax receipts from illegal aliens, with the bulk going toward Social Security ($12.6 billion) and Medicare ($5.9 billion) – programs from which noncitizens are ineligible to receive benefits. FAIR estimated that illegal migrants also paid $3.3 billion in federal income tax – a smaller proportion primarily due to illegal aliens’ lower wage levels – and another $1 billion in state income taxes.

In other words, the fraud has the effect of bolstering financially shaky federal programs. In one of the agency’s rare direct statements on the issue, Social Security Administration Chief Actuary Stephen Goss told CNN in 2014 that without “undocumented immigrants paying into the system, Social Security would have entered persistent shortfall of tax revenue to cover payouts starting in 2009.” Leading progressive Rep. Pramila Jayapal echoed this observation in 2018, arguing that a “complication of [then-president] Trump’s plans to limit immigration is the effect to our Social Security Earnings Suspense File – money that keeps our Social Security system afloat,” including money provided by “undocumented immigrants.”

Given Washington’s bipartisan willingness to tolerate illegal immigration – whether driven by the multicultural left or businesses interests seeking cheap labor – authorities have focused on this apparent windfall to the U.S. Treasury. But they have largely ignored the costs. These include the significant strain illegal immigrant households place on public finances, which FAIR and others estimate vastly outweigh their tax contributions, their impacts on crime and the job market – and on the victims of identity theft.

Reports dating back over a decade show that hundreds of thousands of Americans are unknowingly “sharing” their Social Security numbers with illegal immigrants. Such victims may face tax bills for income they didn’t earn or depleted benefits. Worse, some may experience the burden of bad credit histories and criminal records inaccurately attributed to them after being issued SSNs that illegal aliens had previously invented and used. The overall impact on American citizens is largely unknown because federal, state, and local governments as well as financial institutions have generally failed to notify them even when fraud is suspected.

The relevant agencies were largely non-responsive to RealClearInvestigation’s requests for updated figures on the size, scope, and extent of the fraud. Nor have lawmakers recently given voice to the victims. Congress seems to have last held a hearing spotlighting the defrauded over a decade ago. Related legislation aimed at reducing Social Security number fraud in employment has typically languished, and many lawmakers RCI contacted indicated only a passing knowledge of the issue.

One thing experts do agree on is that the problem is likely to get worse as more illegal immigrants cross the border and seek work.

Immigration Reform Spurs Fraud

The growth in illegal immigrant identity fraud, reflected in part by the booming Earnings Suspense File, serves as an ironic instance of regulation becoming the mother of criminal innovation.

In 1986, Congress for the first time made it explicitly unlawful for employers to hire illegal immigrants. The Immigration Reform and Control Act required those seeking employment to fill out I-9 forms attesting to citizenship or work-authorized immigrant status, and provide corroborating documentation and a valid Social Security number.

The law, signed by President Reagan amid great fanfare, was supposed to end the problem of illegal immigration, and as part of the grand bargain nearly 3 million undocumented immigrants, most of them from Mexico, were granted U.S. citizenship. But the law did not slow the pipeline of immigration as it was intended to do, and it would drive many illegal aliens – not only those crossing the border under cover but also those not allowed to work while awaiting court hearings that can take months or even years to take place – to fraud. {snip}

Aliens can procure Social Security numbers in several ways: Some simply conjure a nine-digit SSN out of thin air. Others use the numbers of their children who were born in the U.S. Still others steal them directly from individuals, purchase them from dealers for $80 to $200 along with a green card as can be done in Los Angeles, or via the dark web for as little as $4.

In a rare instance of enforcement, in June the Department of Justice announced that a joint operation between the IRS Cyber Crimes Unit and the FBI had seized the “SSNDOB marketplace” – a series of lucrative websites touted on the dark web that sold illegally obtained Social Security numbers of more than 20 million Americans. But “synthetic identity fraud” persists – the most common form of ID theft, where fraudsters create an entirely new identity by stealing the Social Security numbers of children or poor adults with little credit history.

While some illegal immigrants work off the books, the Social Security Administration has previously said that 75% are using fake or stolen numbers. By doing so, they gain access to broader employment opportunities. There is another powerful incentive for paying taxes as well. By dint of their generally low income levels, illegals can receive reimbursements through making use of deductions and exemptions, as well as rebates via refundable credits – leaving many with tax liabilities of zero or even as net recipients of government largesse. Immigration proponents contend that many do so in the hope that paying their taxes through employer withholding will weigh in their favor in a future amnesty, reflecting good behavior.

Their fraud can be detected each year when employers submit W-2s. The Social Security Administration analyzes the W-2s to detect inaccuracies, such as mismatched names to the numbers it has on file.

This is where the Earnings Suspense File comes into play. ESF, established in 1937, was long an accounting for wayward tax and Social Security payments – for instance when a newly married woman changed her name but forgot to notify the SSA. Should a legitimate taxpayer find he didn’t get tax refunds or Social Security benefits because of a mix-up with his Social Security number, ESF records ideally would help him get what he was owed. Unreconciled filings would remain in the ESF.

For decades relatively little money was recorded in the file. According to the Government Accountability Office, in the three decades between 1950 and 1980 just $33 billion in uncredited earnings were recorded.

Contributions to the ESF exploded after passage of the ICRA in 1986, as a Social Security Administration inspector general report providing a chart showing annual contributions to the fund makes clear:

Uncredited earnings rose to $77.3 billion in the 1980s, would double in the 1990s to $188.9 billion, and then grow by a factor of 10 over the next two decades to an accumulated $1.9 trillion today – surging by $409 billion between the years 2012 and 2016 alone, according to documents obtained by the mass migration-skeptical Immigration Reform Law Institute via FOIA request.

A 2015 audit from SSA’s IG reports that in a given year as many as one in 25 American workers supplied their employers with false information – “each year, SSA posts to the ESF 3 to 4 percent of the total W-2s and 1.4 to 1.8 percent of the total wages received from employers.”

A 2018 Treasury inspector general report documented more than 1.3 million cases of employment-related identity theft from 2011-2016, and 1.2 million cases in which illegal aliens used Social Security numbers that belonged to someone else or were fabricated in 2017 alone. The Social Security Administration projects this number will rise to 2.9 by 2040.

Private estimates of Social Security number theft have ranged substantially higher.

A 2020 GAO report on employment-related identity fraud identified more than 2.9 million Social Security numbers with “risk characteristics associated with SSN misuse.”

“There’s massive amounts of fraud, the SSA knows it’s happening, and they know it’s your Social Security numbers…being used. These IG reports make it explicitly clear,” said Jon Feere, a former Department of Homeland Security and U.S. Immigration and Customs Enforcement official now with the “pro-immigrant, low immigration” Center for Immigration Studies. “And they basically say that they believe that one of the main reasons for this fraud is because of the employment of illegal aliens.”

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The existence of the ESF means the Social Security Administration and the IRS, with which it coordinates, are sitting on a database containing a substantial population of fraudsters against American citizens. For the better part of two decades, government watchdogs have encouraged these agencies to put the data to use, but they have been reticent.

{snip}

Children are victims of fraud too, and in fact may be prime targets given the clean records their IDs provide for thieves, and that conduct engaged in in their names may go undetected for years. Former California congressman Elton Gallegly wrote in The Hill in 2012 of a number of child victims of illegal immigrant fraud, including among them:

• A 3-year-old issued an SSN already in use for years by a twice-arrested illegal alien, impacting the child’s credit, medical, and work history.
• A 9-year-old denied Medicaid due to wages reported on his SSN.
• A 13-year-old denied as a dependent on her family’s return for supposedly making too much money.

Immigration advocates downplay the criminality involved. “Most workers are buying documents they believe to be false,” a representative of the National Immigration Law Center told the Los Angeles Times. “There isn’t really any intention of stealing someone’s identity.” But even when immigration-related identity theft lacks specific criminal intent, the confusion that ID theft creates when dealing with tax bills, receiving government benefits, facing ruined credit, and other problems can upend a person’s life.

{snip}

In the meantime, the illegal immigrant population continues to swell. The Biden administration has released over one million illegal immigrants into the U.S., in addition to the more than 700,000 “got-aways” who evaded apprehension, and over 190,000 unaccompanied minors released into the interior – for a total of nearly two million people. “To put it bluntly, the Biden administration, and other Democratic administrations, they just don’t care,” says Jason Hopkins.