Here’s an interesting article on identity theft and social security earnings that was passed to me by a colleague. According to the article, the IRS, the Social Security Administration (SSA), and the Citizenship and Immigration Services (USCIS – formerly the INS) all collect information about double and multiple uses of the same social security numbers (SSNs). The information is stored in different computer systems at these different agencies — but is also commonly collected by companies in the private sector, such as banks and credit agencies.

Due to laws restricting the government’s ability to collect information on individuals and privacy/SSN issues, government information on multiple and erroneous SSNs isn’t matched up, and the agencies are currently under no duty to notify the taxpayer(s) connected with the numbers (most of whom only find out about a problem for the first time when they are subjected to an IRS audit or their credit report shows fraudulent account activity).

The overwhelming majority of duplicate social security numbers are associated with the boom in illegal immigration. Illegal workers make up a number or — with increasing frequency — steal or purchase a number (which can get passed around to several people in a community). Withholding taxes are then paid into the system under a particular number, but funds attributed to that Social Security account may in fact be coming from multiple sources. What does the Social Security Administration do with payments on accounts with ‘irregularities’? The payments are put into the Earnings Suspense File (ESF), which is a separate trust fund pool of close to $600 billion dollars in payments unmatched to a definite taxpayer (estimated total, 1Q 2007). The ESF is currently a political hot potato due to its size and association with illegal immigration and the temptation to apply it somehow towards closing the upcoming demographically-driven gap between Social Security entitlements and payments.

If a single employer has more than 10 employees with SSNs that do not match uniquely to a single wage earner, the SSA will issue the employer a ‘no match’ letter. This at least gives the information to the employer — but not to the non-employee individuals associated with the problem numbers. The Real ID Act (controversial; ostensibly passed for reasons of combating terrorism) will create a US national ID card using state-issued driver’s licenses conforming to new federal mandates scheduled to take effect on May 11, 2008. At that point, the driver’s license is widely expected to replace the SSN as a single unique identifier for individuals — but that won’t solve the existing multiple-SSN problem for taxpayers whose SSNs are currently linked to more than one person and who may not be able to find out that their credit history is sitting on a ticking time bomb.