Identity thieves are cashing in on dead children across the nation, stealing their Social Security numbers to collect fraudulent tax refunds from the Internal Revenue Service.
Grieving families say their anguish is amplified by the realization that the crooks get help from an unexpected source: the Social Security Administration itself.
“To see someone acting so evil, so despicable they would prey on children — you would think it’s untouchable,” said Neely Agin, of Arlington, Va. “I’d think there is some human decency.”
Crooks this year stole the identity of Alexis Agin, a spunky 4-year old with thick-lashed blue eyes, an insatiable appetite for Italian wedding soup, and a smile that captivated the doctors trying to defeat her inoperable brain stem tumor.
After Alexis died in January, parents Neely and Jonathan Agin requested an extension from the IRS and filed their tax return in October. When their accountant informed them Oct. 13 that Alexis had already been claimed as a dependent, they said they were “flabbergasted.” The Agins have not yet received their refund, but the IRS typically resolves these cases in about six weeks, other families report.
Scripps Howard identified 28 families — from California to Georgia — who say thieves sought to profit off their dead children by claiming them as dependents in recent years.
Because the IRS will not provide ID theft victims with details about the fraudulent filers — ironically, the crooks also have a right to privacy, the agency says — Jonathan Agin and other victims say they have no idea who claimed their children or how.
But he and other victims are convinced that the thefts stemmed from the easy online availability of their children’s SSNs.
Death master file
Federal officials say ID thieves find their victims in a publicly available federal database: Social Security’s “death master file.” It records and lists information about everyone who dies in the United States, including Social Security numbers and birth dates.
The death master file, which was created in 1980 to help financial institutions fight fraud, has also been posted — and updated weekly — online for years by popular genealogy sites, including Ancestry.com, which charges a nominal fee, and FamilySearch.org, a free site run by The Church of Jesus Christ of Latter-day Saints, the Mormons.
Although there is no national tally of the purloined use of dead children’s identities, the threat has mushroomed in the last five years, said Pat Loder, executive director of The Compassionate Friends USA, a nonprofit organization in Oak Brook, Ill., that serves grieving parents.
As a protection, Loder has directed the group’s 630 U.S. chapters to stop posting deceased children’s birthdays in local newsletters.
“Their identities are ripe for the picking,” Loder said, blaming the Internet for the surge in risk. “Times change, and the world now is not the one we used to live in.”
It is not just deceased children whose IDs are being stolen. Officials at the IRS, responding to an ongoing Scripps Howard News Service investigation into identity theft, for the first time revealed the staggering scope of the problem: Shady tax filers submitted an estimated 350,000 returns on dead Americans this tax season to falsely claim up to $1.25 billion in refunds.
“It takes a sick individual to do this,” said Pamela DeVille of Lafayette, La. DeVille’s life became a nightmare after daughter Alayiah — whose infectious smile, long curly hair and beautiful face would “light up a room” — fell down a flight of stairs, broke her neck and died at age 13 in January 2009, DeVille said.
When DeVille filed her tax return three months later, the IRS rejected it. Someone else had already claimed the teen as a dependent. DeVille said she had no idea how Alayiah’s Social Security number could have been taken — until a reporter told her it was released by the federal government and posted on several websites.
“That’s horrible! Isn’t there any type of law against that?” she asked.
The answer is no.
“It is frankly appalling,” said Nina Olson, head of the IRS’ independent consumer watchdog office. She said the federal government “aids and abets identity and tax fraud” by releasing full Social Security numbers. Olson said Congress should take action.
Social Security officials acknowledge the records they release are misused, but said a 31-year-old federal court order hamstrings them from fixing it.
“It is tragic that unscrupulous individuals use the public DMF” — the Death Master File — “to commit tax fraud,” spokesman Mark Hinkle told Scripps Howard. “But our hands are tied, however, and change will only happen if Congress acts.”
Representatives of Ancestry.com, which says it is the world’s largest genealogy website, and FamilySearch.org, the Mormon-backed one, both defended the practice of posting full Social Security numbers, saying that they are merely publicizing information that has already been released by the federal government.
But some U.S. officials, and many victims and privacy groups, say something must be done to curb the easy availability of the Social Security numbers. Suggested fixes include restricting the use of the Death Master File, delaying how quickly the information is released, or making public only the last four digits of Social Security numbers.
“I can’t understand why it’s necessary to display a whole Social Security number,” said Lisa Watters. Her 5-year old son Benny, a bespectacled blond boy who played ping pong from his hospital bed while fighting a brain stem tumor for over two years, died in September 2010.
After obtaining an extension, Benny’s family in Lake Forest, Ill., filed a tax return in August of 2011, only to have it rejected. The parents have re-filed by mail and are awaiting a refund.
Lisa Watters points the finger at the genealogy websites — Benny’s number is readily available on FamilySearch.org. “It just seems like such a simple fix,” she said.
Taxpayer advocate Olson said that after the IRS instituted a new anti-fraud filter in April, it red-flagged 200,000 questionable tax returns suspected of improperly claiming dead people. Those returns had sought more than $850 million in tax refunds.
Had that defense system been in place for the entire tax-filing season, it would have stopped another 150,000 questionable returns claiming the dead — worth an extra $400 million in refunds, she said. While noting that the filters are not perfect at detecting fraud, her office pointed to them as proof of the billion-dollar scope of the theft.
It’s unknown if the crooks who stole Benny Watters’ ID submitted their false claim before the IRS had instituted its new filter, or after. The IRS would not speak on the record about misuse of the Death Master File, and said federal law prohibits it from talking about specific cases. In a statement, the agency said it focuses on preventing, detecting and resolving ID theft.
Even when families are warned about the ID theft threat, there’s little they can do to prevent it.
Among the few steps you can take:
• File taxes early. The IRS typically processes returns in the order received. Try to get your 1040 to the taxman before an impostor has a chance to claim your child.
• Don’t expect answers. By law, the IRS cannot share information about the person who claimed your child. So let go of any desire to hunt down the culprit yourself.
• Contact credit bureaus. It’s possible the thief also tried to use your child’s name to take out credit cards or turn on utilities. To find out, contact the credit ratings agencies: Experian, Equifax and TransUnion.
• Brace for it. Families hit with this type of ID theft say the worst aspect of the crime is the awful realization that someone tried to exploit a child’s death for profit.
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