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Employment ID Theft

Employers, the IRS and you.

With a nationwide crackdown and numerous immigration laws pending, an anticipated side effect is an increase in the amount of employment identity theft. As employers more frequently check employee documentation, it is becoming more difficult for illegal immigrants to use their real name in combination with a stolen Social Security number. But now there are techniques and software that match names and Social Security numbers, so these thieves can use both the victim’s name and Social Security number. Sure, this could help the thief land a job, but for the victim it results in changes to tax, credit and employment files.

How it affects taxes and credit.

When an identity thief uses a victim’s name and Social Security number to gain employment, the employer reports the wages to the IRS for income tax purposes. When the IRS discovers employer-reported wages from both the thief and victim, there is a mismatch with what the victim filed and it appears they didn’t report all of their wages. That could lead to an unreported income notice from the IRS, and be subject to an audit, penalties or a long process to correct tax records. And of course if the criminal doesn’t pay bills or taxes, it will have a negative impact on the victim’s credit.

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Warning signs.

Your identity may have been stolen for employment purposes if you receive a letter from the IRS, or learn from your tax professional that you filed more then one tax return or you received wages from an employer you have not worked for.

Notification is the best prevention.

If you believe your identity was stolen and has been used to gain employment, the Social Security Administration cannot resolve the problem for you. You should contact the Federal Trade Commission or call 1-877-IDTHEFT (1-877-438-4338). You should also contact the Internal Revenue Service’s Identity Protection Unit at 1-800-908-4490 and notify the credit bureaus.

Federal Trade Commission. “Consumer Sentinel Network Data Book For
January – December 2011.” February 2012.

Javelin Strategy & Research. "2012 Identity Fraud Report: Social Media and Mobile Forming
the New Fraud Frontier." February 2012.

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