IRS Numbers System Open To Abuse

by Mike Godfrey, Tax-News.com, Hong Kong

10 November 2010

Individual taxpayers inappropriately receive personal tax exemptions and tax credits as a result of the multiple use of taxpayer identification numbers (TINs), according to a new report released publicly by the United States’ Treasury Inspector General for Tax Administration (TIGTA).

Any person required to file a tax return must include an identifying number, referred to as a TIN. For the majority of filers, the TIN is the individual’s social security number (SSN). If no SSN is available, the Internal Revenue Service (IRS) assigns a TIN, which can only be used to claim credits on one tax return per year.

The overall objective of the TIGTA’s review was to assess the effectiveness of the IRS’s identification of multiple TIN uses and its ability to prevent individuals from inappropriately receiving tax benefits as a result of the improper use of TINs. As a result of the review, the TIGTA identified 2.4m unique TINs that were used to claim a personal exemption or a tax credit on 3.2m tax returns in 2007.

“Our report underscores the serious challenge the IRS faces in preventing erroneous tax benefits associated with multiple TIN uses,” said J. Russell George, the TIGTA. “Left unaddressed, the amount of erroneous payments our report identified could exceed USD1.9bn over a five-year period.”

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