Social Security Number and Individual Taxpayer Identification Number Mismatches and Misuse

Good afternoon, Chairman Houghton. Good afternoon, Chairman Shaw and Members of the Subcommittee. It is a pleasure to have my first hearing before these Subcommittees on the important topic of SSN and ITIN mismatches and misuse. The growth and misuse of ITINs pose considerable challenges for the SSA, and for SSN integrity. My testimony today will provide an overview of our work to address challenges in three areas. First, the ITIN’s impact on the SSA’s earning process. Second, its impact on SSN misuse and identity theft. Lastly, our most serious concern, the impact of the ITIN or SSN misuse on homeland security. I will conclude my remarks with our recommendations to improve these processes.

The SSA is mandated to maintain records of wages employers pay to individuals. The SSA has no role in assigning ITINs. Many ITINs so closely resemble the nine-digit SSN, many employers assume it is an SSN. When employers use ITINs to report wages rather than an SSN, the SSA cannot post these earnings to the wage earner’s record. The SSA’s record of wage reports where names and SSNs failed to match has grown to about $421 billion in wages, representing $244 million in incorrect wage items. The ITIN also impacts SSN misuse and identity theft. The SSA has made significant progress to strengthen SSN integrity. The SSA now independently verifies all non-citizen immigration documents prior to issuing an SSN, and we encourage the IRS to take similar measures. The SSA recently restricted the issuance of non-work SSNs to non-citizens except under very limited circumstances. However, this new policy may increase ITIN use because non-citizens without work authorization may now try to obtain an ITIN for work purposes.

The ITIN’s impact on SSN misuse poses a serious potential threat to homeland security. We believe ITIN misuse could undermine our ability to provide reliable investigative data to the law enforcement community. For example, we recently participated in Operation Swipe Out, a large-scale anti-terrorism initiative concerning a group of foreigners that defrauded numerous credit card companies of about $5 million. Many of the subjects received lengthy prison sentences and were ordered to pay over $1 million in restitution for the SSN misuse. As part of our homeland security initiatives, we investigated airport employees who used ITINs on identification badge applications for access to critical areas. The ITIN has also facilitated fraud where ITINs are falsely submitted as if it were an SSN. We have also found educational institutions advertising on websites that they will issue, quote, “temporary SSNs” to students. These numbers are not issued by the SSA, but closely resemble SSNs or ITINs using a nine-digit numbering system.

We need improved coordination and sharing of data, and data reliability and the use of shared data. For example, the IRS is barred from disclosing tax information to other Federal, State, or local agencies. However, we believe expanded coordination should be explored to allow for joint pilots or non-investigative reviews to identify areas where formal disclosure agreements could be used. For example, the SSA shares data with the IRS to help assess penalties against employers for reporting mismatched names and SSNs. The SSA also sends DHS information on over 500,000 individuals who are not authorized to work in the United States but still show wages in the SSA’s systems. We believe legislation is needed to require a reoccurring cross-verification of identification data between governmental, financial, and commercial holders of records and the SSA. Cross-verification would be an important step to help prevent the spread of SSN misuse, identity theft, and improve our homeland security.

I congratulate Congress and especially Chairman Shaw and Ranking Member Matsui on the enactment of H.R. 743, the “Social Security Protection Act of 2003,” which provides new safeguards for Social Security programs and beneficiaries. Thank you for your continued commitment to these critical areas.

Date: March 10, 2004

OIG Official: Patrick P. O'Carroll, Jr., Acting Inspector General

Committee/Subcommittee: U.S. House of Representatives Committee on Ways and Means, Subcommittees on Oversight and Social Security

Link: /assets/uploads/2004-03-10_social-security-number-and-individual-tazpayer-identification-number-mismatches-and-misuse_patrick-p-ocarroll-jr.pdf