IRS Commissioner John Koskinen struggled to explain on Tuesday why the IRS has been allowing illegal immigrants to illegally use Social Security numbers that don’t belong to them. Sen. Dan Coats, R-Ind., asked Koskinen to shed light on the practice during a Senate Finance Committee session focused on cybersecurity issues.

Via the Washington Examiner: 

“What we learned is that … the IRS continues to process tax returns with false W-2 information and issue refunds as if they were routine tax returns, and say that’s not really our job,” Coats said. “We also learned the IRS ignores notifications from the Social Security Administration that a name does not match a Social Security number, and you use your own system to determine whether a number is valid.”

Koskinen replied, “What happens in these situations is someone is using a Social Security number to get a job, but they’re filing their tax return with their [taxpayer identification number].” What that means, he said, is that “they are undocumented aliens … . They’re paying taxes. It’s in everybody’s interest to have them pay the taxes they owe.”

As long as the information is being used only to fraudulently obtain jobs, Koskinen said, rather than to claim false tax returns, the agency has an interest in helping them. “The question is whether the Social Security number they’re using to get the job has been stolen. It’s not the normal identity theft situation,” he said.

About 464,000 illegally obtained Social Security numbers were targeted by hackers in a February cyber breach of the agency, while information on 330,000 taxpayers was stolen in an unrelated breach last year.

The IRS website instructs tax preparers that undocumented workers can and should include on their tax returns any income they’ve earned using a Social Security number — even though the IRS admits non-resident aliens are not legally eligible to receive a Social Security number in the first place!

So what does the IRS do with that information?  What action does the agency take when it learns someone else used your Social Security number to get work and earn a paycheck?

“We’re not allowed to say anything. Not a word,” explained an IRS whistleblower.

“You were told to ignore it?” I asked, making sure I heard correctly.

“Yes. Identity theft is a crime. It affects real people in a lot of ways. But we are not supposed to do anything. Just let it go,” she said. “I talk to these people every day who don’t understand exactly what happened to them, and it’s heartbreaking.”

Segall spoke with two IRS whistleblowers who said they were coming forward out of love for their country.

“I just can’t do this no more. It’s not right,” said one of the IRS workers.

“That’s why we’re both here,” said the other, echoing her colleague with long, deliberate pauses. “It’s a crime, and it’s…just…not…right.”

Together, they have decades of experience at the Internal Revenue Service, working on the front lines with frustrated, angry or confused taxpayers who contact the agency for help.

Risking their jobs to come forward, the whistleblowers do not want to show their identity. But they do want to show how the IRS is a knowing accomplice to millions of cases of identity theft while keeping victims in the dark.

“We are not supposed to do anything.” said a whistleblower. “We are not allowed to say anything.”

The five-month investigation found that while the IRS “claims to be taking identity theft seriously, the reality – in many cases – is very different”:

• The IRS accepts millions of tax returns – and issues tax refunds – even when taxpayer documents show clear warning signs of identity theft
• Confidential IRS policies instruct IRS employees not to tell taxpayers when someone else uses their Social Security number to earn income
• The IRS allows illegal immigrants to “borrow” Social Security numbers that do not legally belong to them
• The IRS is discontinuing a program to notify taxpayers when their Social Security number is used by someone else to gain employment

Unable to snag an interview with any IRS officials at the agency’s headquarters in Washington, D.C., Segall turned to the the official Internal Revenue Manual (IRM), the massive, 21,000-page long policy bible for IRS employees. He made some jaw-dropping discoveries.

Some of the manual is “official use only” meaning it’s kept secret from the public. But through internal sources at the IRS, 13 Investigates obtained confidential sections involving employment-related identity theft.

One of the confidential chapters warns IRS employees “Do not disclose to the taxpayer that … their SSN was reported on an ITIN return” and used by someone else to get a job. It instructs IRS workers not to mark the victim’s file with a special identity theft code, explaining “Employment related identity theft is not a tax administration issue because the SSN owner’s Master File tax account is not affected.”

In multiple sections, the IRS manual also suggests employment-related identity theft is of little concern, referring to an undocumented worker who use someone else’s Social Security number as a “borrower” who is simply “working under a ‘borrowed’ SSN.”

The IRS employees who spoke to WTHR expressed frustration because although employment-related identity theft was very common, they weren’t allowed to do anything about it. One of the whistleblowers was threatened to “watch her step” when she brought the issue up to her supervisor.

“If you are borrowing something and that person doesn’t know and probably wouldn’t want you to borrow it, that’s not borrowing, that’s stealing,” said one of the whistleblowers. “You can’t do that. You’re taking something without that person’s consent. That is stealing.”

“And we see it every day – eight hours a day — you see this over and over and over and over again,” said the other IRS employee. “And I know where the person lives, where they work… I see all of that and I’m not allowed to say anything. I’m not allowed to tell them. I talk to mothers who get [IRS] letters [about under-reported income] for their newborn babies. I talk to widows calling about [IRS letters claiming under-reported income for] their dead spouse, and there’s nothing I can do. I know who stole their identity, but I can’t say ‘Look, I’m sorry, but your baby’s Social Security number is being used in the Bronx, New York, by this person that lives at this address.”

The IRS employees told 13 Investigates they routinely see the same Social Security number used to report income on as many ten, twenty, even thirty different ITIN tax returns.  They say raising concerns to IRS supervisors – which they have attempted to do multiple times – is risky.

“We can’t say anything because we’ll be reprimanded and written up. The last time I said something I was told ‘watch your step.’ Every year we go to mandatory briefings where they tell us ‘sit down, shut up and don’t say anything.’ They need to be more honest with the taxpayer,” said a whistleblower, shaking her head in discouragement.

An IRS spokesperson reiterated to WTHR that as long as the undocumented worker was using a Social Security number just to show proof of income, the agency did not consider it to be a tax-administration matter.

“It’s important to remember that many of these tax returns involve people using someone else’s Social Security number for employment purposes – not for the purpose of filing a tax return. When they file their tax return, they are using an ITIN number to file their tax return – not another person’s SSN. This allows people to pay their taxes as the law requires. In many of these situations, an ITIN filer’s use of someone else’s SSN to facilitate employment has no direct impact to the tax filing or tax refund status of the rightful owner of the SSN,” the spokesperson wrote.

(One of the whistleblowers had this response to that IRS statement: “Oh great, so they’re saying they just care about collecting tax money and couldn’t care less about the taxpayer who has their identity stolen? Just because it doesn’t affect their refund status doesn’t mean the IRS should ignore the fact that someone has stolen their Social Security number.”)

And when it comes to “borrowers,” the IRS defended its use of the term, stating:

“The term “borrower” is used sparingly and is in quotation marks in the IRS internal manual. This reflects an effort to distinguish between those who may “borrow” a Social Security number from another family member for work purposes and instances of actual identity theft, which requires a great deal more work on the IRS to identify and protect the rightful owner of the Social Security number. The IRS cannot immediately classify the use of the Social Security number as identity theft without more background information on the source of the SSN. This is a labor-intensive process that’s unrealistic given IRS budget limitations and the universe of millions of ITIN users. Borrower is a neutral term that is used until we have a fuller set of facts.”

The agency had no explanation as to why it believes taxpayers should be kept in the dark when their Social Security numbers are used by illegals for employment purposes – and why that policy was kept secret from the public. Following WTHR’s report last fall, the sections of the IRS manual that mention “borrowers” and that deal with employment-related identity theft disappeared online.

Last October Republicans on the House Oversight and Government Reform Committee led by the Committee’s chairman, Jason Chaffetz (R-Utah), filed a resolution to impeach Koskinen. 

Among the specific charges leveled by Mr. Chaffetz and 18 of his fellow Republicans on the committee were that Mr. Koskinen, appointed by President Obama in December 2013 after the targeting scandal broke, misled Congress when he said he had turned over all of former IRS senior executive Lois G. Lerner’s emails and that he oversaw destruction of evidence when his agency got rid of backup tapes that contained the emails.

It was unclear how far the resolution would go in a Congress preoccupied with so many other fights and with little more than a year to go in President Obama’s tenure.

Six months later, it’s pretty clear that the resolution has stalled and will not be going anywhere.