Treasury Inspector General for Tax Administration – Processes Are Not Sufficient to Assist Victims of Employment-Related Identity Theft. August 10, 2016. Reference Number: 2016-40-065.
“Taxpayers identified as victims of employment-related identity theft are not notified. During the period February 2011 to December 2015, the IRS identified almost 1.1 million taxpayers who were victims of employment-related identity theft. In April 2014, the IRS started a pilot initiative to begin notifying taxpayers that they may be a victim of employment-related identity theft. However, our review of the pilot notification initiative found that the IRS did not sufficiently design the pilot to include a representative sample of employment identity theft victims. The IRS has not established an effective process to ensure that the required notice is sent to the Social Security Administration (SSA) to alert it of earnings not associated with a victim of employment-related identity theft. Our review of a statistically valid sample of 71 cases from the population of 1,878 Tax Year 2013 AUR cases closed as identity theft (i.e., case involved a discrepancy related to wages reported on the tax return) identified that the SSA has no record of receiving an IRS notice for 15 (21 percent) of the 71 cases.”