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Is Identity Theft Overwhelming the IRS? 85

Posted by Soulskill
from the taxing-their-resources dept.
coondoggie writes "The number of tax-related identity theft incidents is exploding, and nowhere is that more obvious than at the Internal Revenue Service, which has seen reports rise from 51,702 in 2008 to 248,357 in 2010. While it has programs in place to fight the identity theft issue, it is also hamstrung in many other areas, according to a report out this week (PDF) from the Government Accountability Office. For example, the GAO says the IRS's ability to address identity theft issues is constrained by privacy laws that limit IRS' ability to share identity theft information with other agencies."
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Is Identity Theft Overwhelming the IRS?

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  • by Anonymous Coward

    Illegal immigrants have figured out that if you use someone else's Social Security # and claim a few dozen dependants for your income tax withholding, or exemption from income tax altogether, you don't have to pay it or answer any pesky questions from IRS agents.

    • One more reason we need immigration reform. There needs to be a sane guest worker program that will help us get a handle on this problem.

      • by GooberToo (74388)

        People don't want insane guest worker programs because that means you'd be forced to crack down on immigration and then suddenly illegals would be prevented from voting and companies would no longer have slaves.

        • Re: (Score:1, Informative)

          by Anonymous Coward

          then suddenly illegals would be prevented from voting

          That's just a myth. There's no evidence this is happening. see here [huffingtonpost.com] Best I can tell people keep bringing it up, because they're ether really stupid or know it's false and really biased. The best evidence I could find for such fraud was a 2005 GAO report (GAO-05-478) where some federal jury administrator gave estimates on the number of potential jurors claiming to be non citizens. These were pull it out of your ass numbers and not one of them was verified to not be a citizen. People will tell all sorts

          • I don't think that one of the issues interfering with reform is that illegals are voting now- but I do think a strategic consideration is that amnesty could provide large numbers of future votes. How much that weighs in, I'm not sure but I think it's part of the mix. I think a bigger part is the financial gain that comes from being able to give illegal aliens substandard pay and treatment. I don't really care who is driving it or which party is part of the problem. I think people ought to pressure all polit

            • by LibRT (1966204)
              All anti-immigration laws are nothing but protectionist policy to restrict the free trade of labor for the purpose of artificially inflating the standard of living in the particular country. If everyone was permitted to sell their labor anywhere at a price of their free choosing, the standard of living would go down in the short and possibly medium term (but not the long term).
        • by peragrin (659227)

          Illegal immigrants don't vote.

          now the rich and farmers losing their wage slaves is another story.

          then again american's won't work for cheap enough so someone has to do the work.

      • by Anonymous Coward

        No, it's one more reason showing that laws that are not enforced are a pox on this nation. Using another person's SSN, for any reason, is against the law. Who is deciding not to prosecute these cases involving illegal immigrants - and why? That's the immigration reform we need.

        If you or I (middle class citizens) filed false tax returns, used another persons SSN, and claimed few dozen non-existeant dependents I think we would be prosecuted. I'm more than certain of that. Heck, I've been audited by the I

        • by jcr (53032)

          Who is deciding not to prosecute these cases involving illegal immigrants - and why?

          Maybe someone with a limited budget who has to choose between locking people up for causing severe inconvenience, and locking people up for violence?

          -jcr

        • Re:In other news... (Score:4, Interesting)

          by dgatwood (11270) on Friday June 03, 2011 @02:57PM (#36332736) Journal

          I'd love to see every little law enforced. Maybe if Congresspeople were regularly fined hundreds of dollars for doing laundry on Thursday, we'd see a return to a more sensible corpus of legal code that is small enough for an ordinary person to understand it, and in which old, stale, useless laws are regularly pruned to make room for newer, more relevant laws.

        • The laws are broken. They need to be fixed. The status quo hurts the immigrants and it hurts American citizens. There needs to be sensible change but I see no indications that such change is anywhere in the near future.

        • by Anonymous Coward

          Maybe if they started throwing employers butts in jail for hiring illegal immigrants in the first place the problem wouldn't be so bad. Most of them wouldn't come here if they didn't think they could find work. The fact is that both R's & D's have looked the other way about this problem because some big employers like being able to hire the cheap labor that won't complain about most of the BS they have to put up with.

          • by amxcoder (1466081)
            That's fine to go after the people hiring them, but I think a lot of people calling for this don't realize that they themselves are just as guilty as the big factories and other companies. How many people in suburbs and upscale neighborhood have yardmen, handymen, landscapers, house cleaners, etc. that most are illegal alien "suspects". If we truely want to stamp it out, we need to go after EVERYONE, so people will stop hiring the illegal that mows their lawns etc. I refuse to hire a handyman for fear o
        • by Bengie (1121981)

          What are you going to do to punish the illegal immigrant for using an SSN that isn't there? If you knew who they were in the first place, this wouldn't be happening. So, you don't know who they are or where they live.

          That's the whole problem. If your force people underground, you CAN'T track them and it just makes the situation worse. Put your self in their shoes. If your last home sucked so badly, you would risk your life to go to another place where you're very existence is a crime, would you give a crap

    • Just in case someone thinks this is serious, when you put an SSN on an IRS form, they cross check it against all other forms. So if someone else uses your SSN, they will figure out which use is legit. This goes doubly for dependents. Since they started doing this, there was a large drop in dependents claimed.

  • That's too bad =P (Score:5, Insightful)

    by Daetrin (576516) on Friday June 03, 2011 @02:23PM (#36332400)
    You know, perhaps if the government had a better track record of handling privacy issues then we would be willing to grant them exceptions in cases like this, where it actually benefits both the government and the individuals the information concerns. But we all know that if we let them share the information in this one case, no matter how specifically we worded the laws and regulations about it, it wouldn't be a week before the FBI and other agencies were trying to get secret search warrants or some other trickery to access the data for evidence of criminal behaviour.

    Vernor Vinge's "Rainbows End" presented a world in which the government had "grown up" and was given unprecedented access to information in order to fight terrorism and regulate and maintain the internet, but didn't actually use that power to persecute people for minor stuff like drug offenses or to try and control what people said. I actually thought that was the most unreasonable part of the book. The tech was all more or less reasonable, but the idea that the government could actually get that much of a clue seems totally outside of reality.
    • by idontgno (624372)

      Vernor Vinge's "Rainbows End" presented a world in which the government had "grown up" and was given unprecedented access to information in order to fight terrorism and regulate and maintain the internet, but didn't actually use that power to persecute people for minor stuff like drug offenses or to try and control what people said. I actually thought that was the most unreasonable part of the book. The tech was all more or less reasonable, but the idea that the government could actually get that much of a

    • by Anonymous Coward

      I don't know if you're American or not but if you are then the joke's on you because you're the one that suffers the consequences of someone else's idiocy in this case. You're going to pay for it one way or another (either by being a victim that can't get help or paying cash/tax to fix and/or handle the problems and broken system).

      You seem to have the attitude that it's someone else's problem because you don't work for the IRS or something. Every American is the victim of their incompetence.

      • Re:That's too bad =P (Score:5, Informative)

        by Daetrin (576516) on Friday June 03, 2011 @04:17PM (#36333298)
        I am an american, and my attitude is not that it's someone else's problem. My attitude is that there's a simple solution (or at least so they'd like us to believe) but unfortunately we can't use it because the government would use the solution in ways that would be worse than the original problem. I am in fact fully aware that i suffer from the idiocy of the government, what else did you think i was complaining about?
  • by Anonymous Coward

    Then the IRS should stop dealing with every individual in the US, and just collect taxes from businesses. Then we could have a streamlined IRS that doesn't have to play for tens of thousands of employees.

    • by Obfuscant (592200)

      Then the IRS should stop dealing with every individual in the US, and just collect taxes from businesses. Then we could have a streamlined IRS that doesn't have to play for tens of thousands of employees.

      This "solution" assumes several things, none of which would be true.

      1. The "sales tax" would completely replace every other federal tax. It won't. It would add to the list of taxes being paid, and there would still be personal income taxes -- because that is the only way to force those awful rich people to pay their fair share. A sales tax would not tax those awful rich people one penny on any money they put in the bank.
      2. There would be no exemptions or other reductions in the sales tax based on income or numb
      • by cdrguru (88047)

        It could be done by simply having businesses collect the withholding tax and there being no deducations or exemptions other than being completed exempted out of withholding. This would (obviously) end the mortgage deducation and tax refunds, but it is how it is done in many countries already. It is acceptable there because they have always had a history of never seeing the money so they don't miss it. Take away tax refunds in the US and people would certainly notice - and a lot of consumer businesses wou

      • The "sales tax" would completely replace every other federal tax. It won't. It would add to the list of taxes being paid

        That's a straw man argument: "Replacing all taxes with a national sales tax would result in not replacing all taxes with a national sales tax." It doesn't attack the flaws of the premise, but instead attacks a different premise that's easier to attack.

        A sales tax would not tax those awful rich people one penny on any money they put in the bank.

        And why should it? This attitude assumes that rich people have giant Scrooge McDuck money vaults that they regularly go swimming in. To the contrary, money that is in the bank and is not being spent provides no real utility to the person with the money, an

  • It's clear (Score:4, Insightful)

    by Anonymous Coward on Friday June 03, 2011 @02:33PM (#36332518)

    the solution to identity theft is to bring back REAL ID.

  • a big stick (Score:5, Interesting)

    by pseudorand (603231) on Friday June 03, 2011 @02:50PM (#36332684)

    What we need is a law that allows victims of identity theft to sue companies who report that they paid wages to the victim when, in fact, they paid those wages to someone who stole the victim's identity. A special court should be set up to handle such cases, and the victim should simply need to show that they didn't actually receive the wages reported to the IRS by the company.

    Companies would then be required to pay the victim all the wages they said they did, plus interest, legal and accounting costs, and any IRS fees and penalties the victim may have incurred. This way, the IRS gets their money, the victim gets his or her money back (and then some), and law enforcement doesn't have to waste tax dollars hunting down illegal immigrants that aren't otherwise criminals.

    I know what you're thinking. This would hurt the legal immigrants and non-white U.S. citizens who couldn't get a job because employers weren't certain of their identity. Yes, that's an unfortunate side-effect, but imagine if some June the IRS sent a nasty reply to your tax return saying that you'd failed to report a bunch of your income. When I think about the headache that would be, fuck 'em!

    Push the responsibility onto businesses, let them demand a method of verifying someone's right to work, and then don't complain when we get a national ID card with a picture and RFID chip. And don't pull out the stupid privacy argument. Of course the government already has such info on all of use. Let's make it official and perhaps the courts will get the opportunity to opine on how it's used.

    • by Relayman (1068986)
      And a third of the payment would go to the lawyer...
    • by corbettw (214229)

      Wow, there's a lot of populist (and somewhat racist) nonsense there. Let's see if I can just focus on the main points.

      Companies would then be required to pay the victim all the wages they said they did, plus interest, legal and accounting costs, and any IRS fees and penalties the victim may have incurred.

      There are two victims when someone steals another's identity to get a job: the person who's identity was taken, and the business who hired the thief. While the former may get hit with IRS penalties on their taxes, the latter also risks getting hit with fines for violating various labor laws. Punishing them further will not help stop the problem, it will simply raise the cost of hiring new em

      • by maxume (22995)

        You really think all those businesses that are employing illegal workers are taking reasonable measures to check the documents that are currently required by federal law?

        I think the reality is that some businesses are being duped and some businesses are working awful hard to not look real close.

        • by corbettw (214229)

          I'm sure there are some cheaters on the business side, whether out of laziness or just trying to short circuit the process or some soft-hearted desire to help people who need jobs get them (not realizing the problems for others this may cause). But you know what? There are already fines in place for not doing your due diligence. How about we enforce those before talking about saddling us with even more laws?

      • by cdrguru (88047)

        No, all of the responsibility for enforcing immigration and identity management belongs to the government.

        Sorry, the US Federal Government has said pretty clearly they are not going to enforce any immigration laws, ever. Obama is going around saying the border is secure and we need to legalize all the folks that are here now. Well, there are still 10,000-20,000 folks streaming into Arizona every month across the "secure" border.

        If the economy was growing at 5% a year there might be jobs for all the folks coming over plus the citizens that are here already. We could give the low-wage jobs to the immigrants an

        • by corbettw (214229)

          Sorry, the US Federal Government has said pretty clearly they are not going to enforce any immigration laws, ever.

          Just because the government had abdicated its responsibility doesn't mean it no longer has it.

          You also completely ignore the point that without providing a way for people to do legally what they're going to do anyway you create a situation where innocent people are hurt incidentally. There has to be a simple, straightforward way for immigrants to come to this country and contribute. They're going to come anyway, that's unstoppable. So we might as well help them do so legally.

        • But the economy isn't growing at 5% a year, it is at 1%, if that.

          2010 GDP growth rate was 2.8%, and 2011's prediction is 3.9% now.

          As for your 5% number, January 2010 GDP growth was 5%.

          • by bryan1945 (301828)

            The question here is- was he talking about GDP growth or job growth. I think he meant the latter. I could give a flying fig about the GDP is I had a job. Oh, wait, I don't.

    • by maxume (22995)

      It just needs to be straightforward for citizens to repudiate the claim that they worked for an employer (which demonstrates that they are not responsible for the taxes on those wages).

      That system would surely be abused, but those people could pay a healthy fine and maybe be flagged for extra scrutiny that they then have to pay for (so the employer would have to do extra checks to hire them, checks that they employee would have to pay for).

      Making the employer pay the victim doesn't make a great deal of sens

  • Epic Fail (Score:4, Informative)

    by scorp1us (235526) on Friday June 03, 2011 @03:08PM (#36332810) Journal

    "248,357 in 2010"

    23,451,534 illegal immigants in the country now ( http://immigrationcounters.com/ [immigrationcounters.com] )
    Assume only 10% work (W2/W4 compliant - meaning the IRS "knows" about them), that means the IRS only has 10% of the illegal immigration in hand.
    And that is assuming the "identity theft" is not the malicious "steal from you or your credit" kind.

    If you don't already know, illegal immigrants use identity theft to get jobs. They need a name, SSN and birthdate. Their payroll taxes are credited to whomever legitimately owns the SSN, thereby working under that person's identity.

    • Oh come now. You don't have to have a social for every job out there. And you don't have to have a social to pay taxes. The IRS is just perfectly happy to issue you a taxpayer ID number and let you file that way. This is ignore the rampant prevalence of cash jobs out there.

      I guarantee you the farmer hiring people to harvest his watermelon crop isn't validating socials.
  • by bmidgley (148669) on Friday June 03, 2011 @03:16PM (#36332878)

    Home depot refused to tell us details about someone who used my wife's name and social security number to get a credit card with them. It turns out that would violate the thief's right to privacy. The local police were waiting for a "serious" crime to be committed before they would get involved.

  • If they think identity theft is bad now, just wait until they start sharing info with other organizations.
  • If you reduce your withholding level to where you have a slight tax due (but be sure it won't exceed $500) by the end of the year, then you won't be putting your refund at risk, since you won't have one.
    • by corbettw (214229)

      No, then you'll just end up with a tax bill payable within 90 days.

      Think of it this way: you earn $50,000 per year, and set your deductions such that at the end of the year you owe no additional tax and get no refund.

      But, someone else uses your information to get a job, and makes $20,000 per year, but sets their deductions such that they owe $3,000 at the end of the the year. Now you're getting hit with a tax bill of $3,000, even though you had your deductions set perfectly. That's the problem we're talking

    • by rwv (1636355)
      Income taxes would be easy to figure out if people only got paid from one source and never got to take any deductions. People don't get paid from a single source, and more importantly deductions are pretty entrenched into the system. But many people and corporations are very happy with their deductions that they don't mind having the extra paperwork so that others who aren't entitled to those deductions get to pay a higher effective tax rate. Trillions of dollars from the real estate market are dependent
  • by corbettw (214229) <corbettwNO@SPAMyahoo.com> on Friday June 03, 2011 @04:14PM (#36333266) Journal

    A big part of me doesn't like the idea of letting the government track anyone and everyone with a common identity scheme. But the reality is that, we need to have one. There are too many holes in our current system of identity management, from people getting jobs or credit in someone else's name, to visa holders disappearing into the crowd. Sadly, I think it's time for the government to set up a central clearinghouse of identities, and for each citizen's or visitor's passport to be tied back into it. We need to have someway to prove we are whom we say we are, and at the same time protect our identities, credit histories, and even criminal history (or, especially, lack thereof) from unscrupulous people.

    Ideally, this would involve the use of shared keys and two-factor authentication. Unfortunately, I don't yet know how you make something like this simple enough for every person out there to use, nor have I worked through what happens when someone forgets/loses their PIN or other authentication mechanism. This should not be taken as a working solution, but as a sky-high view on what ought to be.

    • by cdrguru (88047)

      What is needed is an absolute way of identifying a person and confirming their unforgeable identity. Clearly it cannot be anything they hold, which could be forged.

      Fingerprints are perhaps one way, but just taking a fingerprint and saying it belongs to one of 300 million people isn't going to work at all. A fingerprint MAY be unique at that scale but the subtleties of it make it far more complex than can be dealt with in any automated way. DNA again MAY be unique at that level but it still takes weeks to

      • by corbettw (214229)

        Giving two states to Mexico doesn't solve the underlying problem of lack of identity management. It also would do something to stem the tide of illegal immigration into the US, because it wouldn't take long before both those states slid into the same morass that all of Mexico currently lives under.

        No, the only viable solution is to come up with a better way of proving whether or not someone is whom they say they are. Frankly, I don't know the answer, but suspect it involves public keys, PINs, and something

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