IRS allowed bogus taxpayer IDs: watchdog report

Reuters News
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Posted: Aug 08, 2012 7:27 PM
IRS allowed bogus taxpayer IDs: watchdog report

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)