Coats Amendment to Protect Victims of Employment-Related Identity Theft Passes Finance Committee

WASHINGTON, DC – Senator Dan Coats (R-Ind.), a member of the Senate Finance Committee, today offered an amendment to protect American citizens whose Social Security numbers (SSNs) are stolen by undocumented workers in order to illegally get a job. The Internal Revenue Service learns about this theft when a false W-2 form arrives at the IRS, either sent from an employer or attached to the tax return of an undocumented worker.

The IRS processes these tax returns with false W-2 information and sends refunds to the undocumented worker, but it does little to protect innocent victims from the collateral damage. In fact, the IRS is not currently notifying victims that someone else stole their identity and even forbids its employees from disclosing this to the victim.

Coats offered a victim protection amendment that passed the Finance Committee and is included in legislation that will now be sent to the full Senate.

“This IRS policy can cause severe hardship for identity theft victims,” said Coats. “The IRS may later accuse them of not reporting enough earnings on their tax returns, or they may lose income-related benefits as a result of false information that illegal immigrants submitted to the IRS. It is extremely important to address this issue.”

The Coats amendment would require the IRS to notify victims and provide both steps that victims can take to protect themselves harm caused by the unauthorized use and an offer of IRS victim protection measures to allow victim tax returns to be filed securely. It would require the IRS and Social Security Administration to communicate with each other about these cases so victim earnings are correctly reflected in both agencies.