Stolen Social Security numbers lead to serious tax filing problems

An in-depth look at the issues

NEW ORLEANS (WVUE) - Tax filing season can be stressful for a lot of people, and now some taxpayers are being hit with a disturbing discovery.

Federal government agencies and tax preparers say many people only learn that someone else has used their Social Security number after they file their tax returns and get a surprising response from the Internal Revenue Service.

"Often victims will not find out about that until they themselves go to file their tax return with the IRS and they receive a notice from the IRS saying they’ve under-reported their earnings, and that’s because the employer of the identity thief has reported the income that, that person made using the stolen Social Security number,” said Allison LeFrak, Identity Theft Program Manager at the Federal Trade Commission.

Certified public accountants said they see it in their practice.

"It’s scary, and sometimes it’s the first clue people have that their identity’s been stolen is when the IRS tells them something’s not right,” said Richard Tullier, a CPA with the firm Wegmann Dazet & Company in the New Orleans area.

He said the problem is increasing.

"It is more rampant than it used to be…a Social Security number, a name, and an address and you can file a tax return,” stated Tullier.

When someone illegally uses another person’s Social Security number to get a job, those earnings are layered on top of money made by legitimate Social Security cardholders.

"We’ll try to file, and it’ll say there’s already a return filed, or we’ll file, and they’ll say, well, we have an original return that shows you made 'X’ dollars and claimed this much refund, you owe us the difference. Well then, you’re innocent until proven guilty, but the IRS wants their money, so they want an explanation,” said Tullier.

Artificially inflated earnings can also prevent victims from getting financial assistance they deserve, including student grants and loans.

"It's the most discouraging thing for someone to say you're not you, now prove to me, you're you. It's horrible,” said Tullier.

The Social Security Administration says identity theft is one of the fastest growing crimes in the U.S.

And according to the U.S. Justice Department’s Bureau of Justice Statistics, in 2016, an estimated 26 million people 16 years of age and older, reported that they had been victims of identity theft during the prior 12 months.

"We've gotten copies of these fraudulently filed returns and they're using the person's address, but a different bank account number,” said Tullier of the problem.

People who have had their Social Security numbers stolen call it a nightmare.

Mason Stewart said he received hospital and other types of bills he did not deserve after someone stole his wallet containing his Social Security card.

“It was like 36 bills and it’s probably more because my card is still out there somewhere,” said Stewart.

The digits on the government-issued cards are a hot commodity.

"There is a black market. On the dark web, identity thieves can go there to purchase all kinds of information, but Social Security numbers are especially valuable,” said LeFrak.

Social Security numbers are like the DNA of personal identification. They are used to get lines of credit, and of course, jobs.

"That is one of the main issues that victims of these types of scams where their Social Security number is stolen, that's one of the main issues that they face is employment, people using the Social Security numbers for employment,” said LeFrak.

The Federal Trade Commission is the nation’s lead consumer protection agency and collects complaints about not only identity theft, but also Social Security scams.

“Numbers have made a dramatic increase…in 2018, we had 40,000 consumers reporting Social Security scams to us with fraud loss over $12 million,” said LeFrak.

And that’s only the data from the FTC.

Victims of Social Security Fraud and identity theft often complain to local authorities and other agencies.

"Absolutely, we get calls on that on a weekly basis, maybe on a daily basis,” said Cynthia Albert of the Better Business Bureau.

"They may say they're from the Social Security [Administration] and there's been a problem and they want you to answer some questions,” said Albert.

LeFrak said consumers should not entertain such calls.

"Immediately hang up and do not provide any information. The Social Security Administration is not going to call people out of the blue like that. That’s not the way they’d be contacted. It would generally be by mail,” stated LeFrak.

Still, it is not always easy to decipher if a call is not legitimate because the callers may be engaging in “spoofing”, a practice of changing the caller ID number to a number that isn’t the real phone number the caller is using.

"The scammers can make it look like any number that they want is coming in. In other words, your ID on your phone is really not any good anymore because they can make it look like your next-door neighbor is calling, can make it look like it's from the police department,” said Albert.

The Federal Communications Commission proposed new rules Thursday (Feb. 14) banning illegal spoofed text messages and international calls.

But phone calls and text messages are not the only ways identity thieves operate. They also sneak around on the web and hack into consumers’ emails and personal records. And experts say sometimes crooks buy Social Security numbers from people working in certain businesses and health care facilities.

Victims can work with the IRS to clear their names, but it does not happen overnight.

And the Social Security Administration says obtaining a new number may not solve all of victims’ problems because other governmental agencies and private businesses like banks and credit reporting companies will have records under individuals’ old Social Security number.

During the tax filing season millions turn to others to prepare their returns. The Better Business Bureau cautions people to do their homework when looking for someone to do their taxes.

"We have had complaints in the past where people call up and said that they have given, of course, you have to give all sorts of personal information, your bank account number, Social Security number to the tax preparer and then they just skip town,” said Albert.

The Social Security Administration says it detects and investigates the misuse of Social Security numbers when individuals’ names and numbers are used for work purposes only.

Taxpayers are urged to use the Social Security Administration’s website to create a “My Social Security” account which allows people to check their earnings history.

Experts say it is also a good idea to check your credit report annually.

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