IRS allowed bogus taxpayer IDs: watchdog report

WASHINGTON Wed Aug 8, 2012 7:27pm EDT

Women walk out of an Internal Revenue Service office in New York April 18, 2011. REUTERS/Lucas Jackson

Women walk out of an Internal Revenue Service office in New York April 18, 2011.

Credit: Reuters/Lucas Jackson

Related Topics

WASHINGTON (Reuters) - The Internal Revenue Service has recently issued thousands of tax identification numbers to ineligible people and, in some cases, IRS managers condoned the practice, the tax collection agency's watchdog said on Wednesday.

The accusation by the Treasury Inspector General for Tax Administration, or TIGTA, comes at a time of intense national debate about illegal immigrants, many of whom apply for and get taxpayer ID numbers instead of Social Security numbers.

After the report was released, a handful of Republican lawmakers slammed the IRS over its management of the Individual Taxpayer Identification Number (ITIN) program.

"The appalling management of the ITIN program is a clear example of failed leadership and the buck must stop with you," Republican Congressman Sam Johnson said in a letter to IRS commissioner Doug Shulman on Wednesday.

The IRS said in a statement it is reviewing the problem to make changes ahead of next year's tax filing season.

U.S. workers who are not citizens and do not have Social Security numbers can get an ID number from the IRS that they can use to file a tax return.

The IRS continued to send out tax ID numbers after agency employees raised concerns that some applications may have been bogus, according to Wednesday's report.

"IRS management is not concerned with addressing fraudulent applications" for tax ID numbers in part because of "the job security that the large inventory of applications to process provides," TIGTA said.

The IRS in 2011 processed more than 2.9 million tax returns with tax ID numbers and not Social Security numbers, TIGTA said. These tax filings resulted in $6.8 billion of tax refunds.

The Republican-controlled U.S. House of Representatives passed a bill in May that would have restricted tax refunds to taxpayers with Social Security numbers. It did not become law.

An estimated 11.2 million unauthorized immigrants were living in the United States in 2010.

TIGTA said in a report last year that individuals not authorized to work in the United States received $4.2 billion in refundable tax credits.

TIGTA's report said the IRS shut down an internal effort to detect questionable tax ID number applications.

The IRS in June announced changes to the ID program in June, saying applicants must provide original documents, such as a passport or birth certificate, to get an ID number.

(Reporting By Patrick Temple-West; Editing by Bob Burgdorfer)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (2)
RedXIV wrote:
Why, that would mean that illegal immigrants are paying taxes. But the Republicans say they don’t. How can this be? Could the GOP be…lying?

Aug 09, 2012 2:47am EDT  --  Report as abuse
jhep3304 wrote:
To RedXIV
Seems like a rather dumb comment given the facts in the article.
Seems pretty clear that they not only did not pay any taxes, they received thousands of dollars apiece in unearned income tax rebates.

This well known scam has been reported by the MSM (WaPo, NYT, HUFFpo to name a few).

Aug 09, 2012 1:28pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Pictures