SOME undocumented workers use other people’s Social Security numbers (SSN). That creates a problem. Then they use another number to file their income tax returns – their own Individual Identification Numbers (TIN). Using two numbers creates another problem, actually two problems:
1. To the IRS system – Unmatched W-2s, 1099s and 1040 tax returns take a toll on their system. IRS master data files show income from employment (W-2) and independent contractors (1099-MISC) that were submitted by employers and payers that have not been reported by workers. Forms from payers show Social Security numbers while tax returns show TIN.
2. To undocumented workers themselves – They are not credited (meaning they cannot collect later) with Social Security benefits for retirement and Medicare.
These scenarios are classified as part of identity theft but are not really because they may have been borrowed from friends and acquaintances with their permission. Social Security numbers were not stolen. This is not your garden-variety type of identity-theft situation.
A senator criticized the Treasury Inspector General for Tax Administration (TIGTA) that IRS processes tax returns with false W-2 information and issues refunds as if they were routine tax returns. The legislator also stated that IRS ignores Social Security Administration notifications of names and numbers that don’t match up. IRS had a pilot program to address this issue but it ended without further resolution. There’s a reason for that – IRS cannot be too strict to discourage workers from filing and paying taxes. We need more people to file and pay taxes to sustain our economy.
In the meantime, the IRS gets burdened by unmatched numbers while undocumented workers contribute to Social Security system funds that they may not use later when they retire.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at email@example.com.