Audit Finds Employment Identity Theft Going Unnoticed
Identity theft has gotten a lot of attention over the past couple of years. We’ve written a lot about the subject during that time. One of the varieties of identity theft is employment identity theft, but the agency that oversees the IRS says legitimate taxpayers aren’t being notified they’re a victim of this crime.
How It Works
Employment identity theft happens when a cybercriminal uses the personal data of another person to gain employment. The crook can be an illegal immigrant or a regular citizen who wants to escape his own identity.
This crime can cause a significant burden to innocent taxpayers, including the incorrect computation of taxes based on income that doesn’t belong to them. Normally, the Internal Revenue Service will notify the legitimate taxpayers once the agency has enough evidence to suggest employment identity theft has taken place.
But that didn’t always happen in 2017.
The Treasury Inspector General for Tax Administration (TIGTA) audited the IRS’ work and found that most victims of employment identity theft—despite being identified as victims—are unaware their Social Security numbers are being by someone else for employment.
The culprit was found to be a programming error in the IRS computer software that limited the agency’s notifications to those victims who were not identified in prior years. That let nearly a half-million repeat victims of employment identity theft slip through the crack without notification their information had been used elsewhere.
As of last September, the IRS had prepared a request to get its Information Technology section to correct the programming glitch. The IRS also says it will evaluate the results of its notification program in general.
The TIGTA audit also found problems at the other end of the spectrum, uncovering taxpayers who were told they were victims of employment identity theft, but had gotten a notification in error. In most cases these 15,000 taxpayers were spouses of taxpayers who filed legitimate tax returns reporting the spouse’s wages and Social Security numbers.
Computer processing mistakenly placed an employment identity theft “marker” on the spouses’ tax accounts, generating the erroneous notices.
The Inspector General wants the IRS to send an employment identity theft notice to more than 458,000 victims identified by the audit, telling them their Social Security number was used by another person to obtain employment. The IRS has also been asked to reverse the employment identity theft markers on the erroneous accounts and fix the programming bug that created the mistake. The audit also suggests the IRS take a hard look at notifications carried out before 2017 and see if there were erroneous markers placed on taxpayer accounts.
The IRS agreed with all the Inspector General’s recommendations.
Click here to view the full report and the complete IRS response.