Unknown person fraudulently claims dependent

[FEDUKE404]

For the fourth year in a row, a client has been unable to e-file because his dependent child (pre-teen) has been claimed by someone else.

The parents are happily married, neither has been married before, and the child lives with them the entire year. The Soc Sec number, name on the card, DOB, etc have all been verified to be correct for the child.

The routine now is to try to e-file, receive error code #507, then regroup and file a paper return. Aside from the hassle and delays, it is also a problem that the parents' tax return is fairly complex and I am fearful of some IRS employee messing up the data when it gets typed in.

The client has gone to Social Security, IRS, and all over and basically gets the run around. Each year the parents have eventually been able to claim the deduction, without any further "proof" on their part. Apparently "the other person" claiming the child loses each time.

The client has reached the point, again after four repeat performances, that he is now mad as hades. Is there no way the IRS can put an end to the fraudulent claim? Of course, it goes without saying that NO information as to who has claimed the child is ever divulged.

A contributing factor is also that because of investments, much of the parents' tax information is never available until very late March in the first place. Filing "earlier" is not a viable option. The father also tried to do a credit check on the child, but hit a brick wall there because the child is a minor.

I told the father to write his congressman.........

FE

[geekgirldany]

I ran into something similar but it was the ex-wife/mother of the child that was doing it. They had been divorced for 12 years. Caused problems every year and was never worked out. IRS would not really help. Just told them it was who got there first and then they would have to work it out. Crazy! My customers eventually moved to another state. Do you think the taxpayer advocate service would do anything?

[Bees Knees]

I guess I would tell the client to file a complaint at every level of IRS and Social Security that there is to file a complaint with. Someone at IRS or Social Security may eventually get tired of it and actually do something.

You always exhaust legitimate channels before going to the extreme. If nothing else works, you could have the legal name of the child changed on the Social Security card. For example, if she is named Judy, change it to Judie, or Sandra to Sandy, or Chris to Crys, or something along those lines. Maybe since this is a pre-teen, the kid won’t care. With the new name or spelling changed, the first person trying to use the old name and Social Security number should get an e-file reject the first time, thus allowing your client to file without a problem.

You might also consider changing the name to prevent identity theft. If someone has stumbled across a real name associated with a real Social Security number, they could use that information for all kinds of other things. They may already be doing that, although it is not yet showing up on credit reports.

[FEDUKE404]

Mother not a likely candidate

I ran into something similar but it was the ex-wife/mother of the child that was doing it. They had been divorced for 12 years. Caused problems every year and was never worked out. IRS would not really help.

Since I need to avoid any privacy issues, the child as an infant was adopted from a foreign country, using a reputable organization for the entire process. The birth mother is far, far away.

My best guess is someone "in the system" (doctors, banks, schools, or whatever) pilfered the dependent's information.

As you know, the IRS just sits there and says "it's not our problem!!"

Thanks for the help.

FE

[FEDUKE404]

Soc Sec number and card

(snipped) You might also consider changing the name to prevent identity theft. If someone has stumbled across a real name associated with a real Social Security number, they could use that information for all kinds of other things. They may already be doing that, although it is not yet showing up on credit reports.

Bees - The parent has bothered a lot of people, especially in "year #2." I think he is now probably re-invigorated with "year #4."

He did go to Soc Sec office, and apparently they do track when replacement Soc Sec cards have been issued. Other than to the (adoptive) parents, no card has yet been issued. That should at least close some doors.....for now!

FE

[Burke]

Is there any way you could file a return with the income from W-2's and other sources and claim the dependent first early in Jan? Investment income should be available via year-end statements from brokerages and would be closely accurate. You could then file an amended/corrected return for any changes later in the season. At least this way, THEY would get the letter disallowing the dependent. It may be a valid dependent for the other person, just the wrong SSN. Once it is disallowed for them, I'll bet they correct it.

[Lion]

Illegal Worker

It may be an illegal worker who pulled it out of the air or bought it to use for employment, but he has his ITIN for actually filing his taxes, if he files. If no identity theft-type issues, such as a credit card in the child's name, then it certainly isn't identity theft after four years. I'd keep hassling the SSA.

[dkss]

Mfs

Does one spouse have all "their" info early? Maybe try MFS and claiming child early in the season. Then amend to MFJ when other spouse's investment info comes later in the season.

[DaveO]

I have heard of SS issuing a "new" number

Don't know the procedure, but that might be a way to go since the child has no earning history.

[Roland Slugg]

It's very possible that the other taxpayer who is using that child's SSN simply entered it incorrectly four years ago (or his tax preparer did), and he's been reusing the same incorrect SSN ever since. Perhaps one of the digits is off, or maybe two digits are transposed. I would try to get the IRS to notify the other filer and require him to correct his error in the future. If the error is intentional, the IRS should be very willing to pursue the perp.

I do not agree that filing an early return with partial data is a good idea. Your client will then have to file an amended return after all his information is available close to April 15th. Since amended returns must be paper filed, nothing is really accomplished.

[thomtax]

I do not agree that filing an early return with partial data is a good idea. Your client will then have to file an amended return after all his information is available close to April 15th. Since amended returns must be paper filed, nothing is really accomplished.

Roland - The one thing that would be gained is that it would get the dependent on their return, forcing the incorrect filer to file by paper. This might cause them to either rethink or check out whether to use this number again. Don't know if it would help, but after 4 years, something needs to force the issue. IMHO

LT

[Burke]

It's really funny to me that the IRS will verify all dependent's SSN's but does not seem to check the secondary spouse's SSN on a MFJ return. Two years ago, a client called me and said she noticed her SSN was wrong on the return by one digit. I checked prior years, and it had been the same in my records for 16 years! We immediately checked her social security earnings history, and it was all properly accounted for based on her W-2 information.

[joanmcq]

my guess is that it is someone illegally using the child's number. if the person is only using it to work and file taxes, not to get credit, there wouldn't be a credit history under that number. SS should be able to check if earnings are being reported under the number.

[KooDeeZ]

Someone is using it only as a dependent, not to work and file taxes and not bought off the street to work. If that were the case, it would most likely be a reject 510.

Well, you know that whoever is claiming the dependent most likely make above EIC limit or they would have a 506 as well )

Go to IRS website and search for their fraud department. You file a police report for identity theft and give that to the IRS who will, in return, give you some type of case number so you can follow up.


Burke, 503 reject is in regards to spouse's last name/ SSN. Sometimes, they don't catch them all but in most cases, they will. Your story is another great way of looking at what might be happening in this case.... Spouses SSN is wrong but matches up w/ another SSN that has the first four characters of the last name that are the same as the woman in your story )

[Burke]

That would be some wild coincidence.