Does IRS no longer even bother with fraud?

[FEDUKE404]

A long-term client has, for at least the last six years, been unable to electronically file because someone is claiming his dependent child.

The couple is happily married, first marriage for both, the child is their own, and the child lives with parents exclusively.

Client has contacted the IRS numerous times (basically each year!), Congressman/Senator, and last summer even the IRS fraud unit (CA?) which BTW never in any way responded to his correspondence.

The IRS does know who the offending person is, but each year the client's efiled return bounces. In recent years we went the try to file, reject, remove the dependent, efile, then return the dependent and file an amended return route, but that can be tedious. For every year the client eventually has received the refunds due by claiming the child on his tax return. (It should also be noted this problem did not appear until client starting efiling.) And, of course, don't forget the child tax credit is in play also.

The client has a reasonably complicated tax return (why I don't like some IRS clerk to have to reenter everything from a paper return!) and is also getting a substantial refund which will, of course, be delayed way past the "normal" refund dates of an efiled return.

What exactly is going on here? Why cannot (or is it will not?) the IRS resolve this problem? The client is beside himself and I totally understand his complete frustration which is now beginning to include a significant amount of anger.

(Yes, all Social Security records have been completely verified as correct. And "filing early" is not a viable option due to having to wait for investment tax documents to arrive, now generally in mid-March.)

FE

[Lion]

Irs

The IRS may be getting some tax revenue from an illegal alien filing taxes under the child's name and have no incentive to stop it. Try the SSA. Also, notify all three credit bureaus re the child's name and SS#. You can help the parents fill out new W-4s to have more in their take-home pay and reduce their refund to close to zero.

[BOB W]

The IRS may be getting some tax revenue from an illegal alien filing taxes under the child's name and have no incentive to stop it. Try the SSA. Also, notify all three credit bureaus re the child's name and SS#. You can help the parents fill out new W-4s to have more in their take-home pay and reduce their refund to close to zero.

Since you are filing amended anyway, just file a January 1040 with just the W-2(s) then file an amended with all the other data. Maybe this will stop the use of their son's SS# in the future.

[FEDUKE404]

Parent has done everything possible

The IRS may be getting some tax revenue from an illegal alien filing taxes under the child's name and have no incentive to stop it. Try the SSA. Also, notify all three credit bureaus re the child's name and SS#. You can help the parents fill out new W-4s to have more in their take-home pay and reduce their refund to close to zero.

Client has visited the Soc Sec folks with birth certificate et al in hand. SSA has previously confirmed no earnings have yet shown up on Soc Sec records for the child.

My guess is the child is helping someone get a little bit more moola each year via the infamous EITC.

Credit bureaus are of zero assistance - they do not track minors (I guess because they cannot have credit?).

W4 is hardly an issue. Only one parent is employed, and bulk of H/W income is from investments which are all over the place due to economy. Figure in "blocked" child tax credit and now some refundable college credits from older sibling, and withholding is just a small part of the equation. We also have to protect against any potential Form 2210 issues, generally using the Exception 1 approach (pay in as much as prior year liabilities for federal and state).

The cash flow is almost secondary - clients would just like to be able to file ONE return each year, without any problems related to someone out there claiming their child on a recurring basis.

FE

[FEDUKE404]

Race to file

Since you are filing amended anyway, just file a January 1040 with just the W-2(s) then file an amended with all the other data. Maybe this will stop the use of their son's SS# in the future.

Aside from being a hassle (and this year we decided NOT to file any amended returns - try federal only efile once, then paper only), my guess is "the other person" is probably waiting at the storefront office as soon as the doors open in January.

And I'm curious what the reason for the amended return would be? "We filed with a W2 only to beat the blank-blank, and now here are the Sch A, B, D, and E items we've decided to add."

I simply refuse to believe that the IRS could not make this long-standing, multi-year problem go away if only they were so inclined.

FE

[Gretel]

Have you tried the Taxpayer Advocate? It is really unbelievable that this is happening. In MT I would contact the state representative for the IRS who I meet every year at the IRS liaison. She know a lot about impossible processes at the IRS and knows ways how to achieve something anyway.

You should have this person in you state too.

[erchess]

Change SSN of Child

This can be done when you know identity has been stolen. Then figure out how someone got number. Let any Medical Offices or anyone else who has the old number continue to use it rather than providing new number. Something here gave me the impression child is too young to work so basically I can't think of any reason for anyone except parents FE and the taxing agencies and of course the SSA to have the child's number.

I do understand the frustration and even anger of the clients and FE here but I do think my suggestion will put an end to the problem.

[S T]

Ssa

I haven't checked on in a while

But I always understood that SSA WOULD NOT change any SSN numbers, regardless of Identity Theft.

Obviously in FE's taxpayer's issue, the "child's SSN has been sold or passed onto to someone, or it has been happenstance of one digit off

As far as I know there is no litle to known remedy.
From SSA website http://www.ssa.gov/pubs/10064.html



Sandy

[erchess]

Please See

http://www.ssa.gov/pubs/10064.html#new

about changing a SSN.


Note that the link to my page is on Sandy's page with the words "Should you get a new social security number?" Even that strongly implies to me that it can sometimes be done.

[taxea]

I agree with Gretel...get help from the TAS office or contact offprofresp@irs.gov. (Office of Professional Responsibility)

[taxea]

I agree with Gretel...get help from the TAS office or contact offprofresp@irs.gov. (Office of Professional Responsibility)

When I have run into this problem I have included a statement with all the information I have obtained on the suspect offender (usually a relative) with the 1040X and the problem never repeated.

You should also have the client contact SS. They can find out who is using the number.

[FEDUKE404]

Friday update

...checking in again with way too much work of my own to do.

Client was referred to Taxpayer Advocate office by US Senator after client inquiry to senator. After much "investigation" this (apparently non-IRS person??) pulled up some submission data on several years of my client (bounced) efiles. His comment was child(ren) were showing SSN of parent/another sibling and some other hogwash. Just to appease him, I removed both dependents from data base, and carefully reentered. Same results.

Next he said it must be a software problem. Question: How come such a "problem" never occurred with any of my many other efiled tax returns over the years?? I mentioned this to software company, who said such was absolutely impossible. (I even provided them with a copy of the somewhat-sanitized data file per their request.) When same thing was later stated again by TPA, I for a second time asked the software company about such a possibility, citing what the IRS person had told me.

Apparently they were not very happy about a quasi-IRS person impugning the integrity of their product, and someone in their ivory towers contacted an IRS official in his ivory tower. We are talking about "high level discussions" or more likely "arguments." Within 24 hours I received an unexpected phone call from an IRS person (Austin?) who basically said that although he could divulge virtually nothing the dependent was being claimed by a person on the other side of the state and the tax returns had been prepared by commercial firm(s). There was no "software problem."

So basically the IRS knows who the offending person is, and they should also know by now that my client IS entitled to claim the child. Why can't they make this problem go away??

Oh well - everyone have a very happy Easter!

FE

[FEDUKE404]

How can Soc Sec help?

...
You should also have the client contact SS. They can find out who is using the number.
...

Exactly how would the SSA folks have any relevance when they have already stated to client (see my previous posts) that there are no Social Security earnings on file for that specific SSN ???

FE

[taxdude71]

Sounds like the kid should just get a new social security number. This will solve a lot of problems later in life.

[Edsel]

No Incentive to Stop

FEDDUKE they don't WANT to stop this kind of fraud.

Congress has told them the EIC is a desired wealth-transferring vehicle and not to tamper with it. I know other horror stories similar to yours where the offenders are literally known by name and address and they still do nothing.

A congressman in a neighboring district told one of my clients that they have no intention of slowing the wheels on EIC because they believe it is a good thing. I know a few preparers who have been penalized for lack of "due diligence" but other than to assess the penalty they IRS makes no effort whatsoever to collect from the offenders.

The fraud involved in "selling" social security numbers, claiming false spouses, etc. in the underground economy has no hope of ever being restrained if no harm will ever come to them. If the IRS thinks the tax preparers can stop it, they've got to be insane.