Social Security, IRS numbers fuel identification theft

Widespread misuse of Social Security numbers and individual taxpayer identification numbers results in millions of dollars in federal benefit payments and tax refunds to workers not legally eligible to work or live in the United States, a panel of experts told Congress.

The practice hurts millions of citizens who are victims of identity theft by having their Social Security numbers stolen and misused, witnesses said. Although federal agencies have recently put new restrictions in place and the president has signed a law to curb some of the abuses, the problem has not gone away.

Testifying March 10 before a joint hearing of the House Ways and Means Committee's Oversight and Social Security Subcommittee, two panels of federal officials condemned the unrestricted use of those key federal identifiers for state government and commercial transactions for which the numbers were never intended.

The lack of reliable information systems of authenticating personal identities is a large part of the problem, witnesses said. But stopping the abuse won't be easy because of conflicting interests of the Internal Revenue Service, the Social Security Administration and the Homeland Security Department -- each has a stake in any Congressional remedy to staunch the misuse.

Patrick O'Carroll, SSA's acting inspector general for investigations, called for policy changes that would let the three agencies cross-verify their databases where Social Security numbers are key data elements.

Another witness, Nina Olson, the national taxpayer advocate, acknowledged the abuses, but warned lawmakers against making any changes that could undermine faith in the confidentiality of IRS tax administration procedures.

Olson said Congress should not change the current law to allow the IRS to share information with SSA and DHS about taxpayers to whom the tax agency issues individual taxpayer identification numbers (ITINs). But, she added, both SSA and the IRS should do more to verify the identities of those to whom it issues Social Security numbers and ITINs.

SSA has several new electronic verification efforts, including an Internet service being tested with 85 employers. The online system, which has processed 4.5 million verifications, permits employers to check the accuracy of employees' names and Social Security numbers against SSA's electronic records.

SSA is evaluating the results of the pilot before expanding it further, James Lockhart, SSA deputy commissioner, testified at the hearing.

DHS officials were invited to testify at the hearing, but the subcommittee chairman, Rep. Amo Houghton (R-NY), said they declined the invitation.

The difficulty of balancing the differing missions of three federal agencies was summed up by Michael Brostek, director of tax issues for the General Accounting Office, who asked, "What priority should these agencies place on addressing illegal alien issues versus their other responsibilities?"