IRS Replies to Concerns about Prosecution of ITIN Users

The following is from an email reply by IRS’ National Taxpayer Advocate to an inquiry from an attorney regarding the prosecution of an allegedly undocumented individual for using a false social security number on his federal tax forms. The complaint in that case indicated that the IRS researched computer records for individuals who were using ITINs on their W-2 forms then filing tax returns, and that this individual had a W-2 form that showed an ITIN rather than a social security number. The attorney had been advised by a local IRS investigator that the IRS has compiled a list of 250,000 persons who, based on similar research, it believes are undocumented.  The IRS National Taxpayer Advocate’s reply disavows much of the information from the local investigator:

“[T]hank you for bringing this case and this issue to my attention.   Since receiving your email, I have discussed it with the Commissioner and Deputy Commissioner for Services and Enforcement of the IRS, the Acting Treasury Inspector General for Tax Administration, and Treasury officials. While I cannot discuss with you the specifics of your case at this time and in this context, I want to address some of the serious concerns you have raised.
 
First, it is not the policy of the IRS to release tax returns or return information to federal agencies for investigation of nontax crimes unless a Federal district court judge or magistrate has issued to us an ex parte order requiring the release of that information.  IRC  6103(i)(1).

Second, section 7526 authorizes low income taxpayer clinics to conduct outreach and education to taxpayers who speak English as a second language. Included in this taxpayer population, as anticipated by Congress in hearings leading to enactment of 7526, are taxpayers who are resident aliens for tax purposes under the IRC substantial presence test  but who do not have authorization under immigration laws to work in this country.  LITCs can, and should, include in their outreach and education activities, information about how to meet tax obligations where the taxpayer must use an ITIN to file.

Third, IRS employees are required to release information to TIGTA in the course of a TIGTA investigation.  I have been advised personally by the Acting Treasury Inspector General for Tax Adminstration that it is completely inaccurate to state that TIGTA is looking at 250,000 taxpayers and will prosecute them.  TIGTA is now looking into the way in  which this particular case was handled.  I have been assured that this kind of issue and action is not in its normal investigative inventory for handling in the manner this case was handled.
 
Fourth, there will be a high-level meeting on Thursday among various officials to discuss what has transpired here.  I will communicate with you more after that meeting.
 
In closing, I just want to say that clinics, VITA sites, and TCE sites are well within their rights to advise taxpayers about the consequences of using "borrowed" or "stolen" SSNs, about application and use of ITINs, preparing returns that have an SSN/ITIN mismatch so long as the ITIN is the number listed on the actual return, and the importance of  taxpayers fulfilling their tax obligations.  Again, the protections of IRC 6103 for tax returns and tax return information is very great.  (You should read my annual report section for background on this issue.....).

We all recognize how serious this matter is, and how quickly word spreads. We want all taxpayers to be able to meet their filing requirements and do not want to impede their ability.

I thank you for sending me this issue promptly, and I will get back to you with more information later.”