“One in four kids will be the victim of identity theft or fraud,” notes Emma Camp of Reason magazine. But the IRS isn’t doing anything about it, even though Congress has told it to address the problem:
Children are surprisingly frequent victims of identity theft—around 25 percent of them will experience identity fraud or theft by the time they reach adulthood. The consequences of bad credit caused by fraud are both steep and difficult to reverse. Thankfully, the government is required to alert child victims of identity theft. However, it is failing to meet these obligations, leaving easy paths for identity theft open. The IRS is legally required to inform parents if their child’s identity is being used to commit tax fraud.
But Shoshana Wiessmann of the R Street Institute notes that the IRS refuses to do so merely because the children in question don’t have active tax accounts.
Children in foster care are especially vulnerable to identity theft. To try to guard against that, federal law requires states to run credit checks on foster kids over the age of 14, but most eligible children have not received these checks.
“Even those who received any or all reports received little help understanding them,” Shoshana Weissmann says. “And few children facing identity fraud receive any help resolving it.”
As Reason explains:
The Social Security Administration (SSA) doesn’t make things much better. Since most possible Social Security numbers have already been given out, a criminal who makes up a number has better than even odds that it is already in use or about to be assigned to someone else. Instead of taking steps to fix this vulnerability, Weissmann writes that the SSA doesn’t check whether a number has been used in fraud before assigning it—leaving newborns saddled with bad credit histories from birth.
The cost of this carelessness by the IRS is substantial. Weissmann points out that “more than half of minors who were victims of identity theft report being denied access to credit at least once because of it, and some deal with the consequences for a decade or more. Some have even acquired a lifelong criminal record for an offense committed by the thief that stole their identity.”
Weissmann points out that these problems have obvious fixes: “Congress, for example, can and should require the SSA to check SSNs before issuing them, and to make sure the agency does not issue numbers with a record of fraud. The IRS also needs to be reminded, with a bit more forcefulness, that it’s legally obligated to alert parents when their children’s identities have been stolen….Another option is to lock minors’ credit files at the time SSNs are issued, or at least offer the option.”
