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Coats "Outraged" By IRS Investigation, Pledges Action
Updated November 5, 2015 9:53 AM
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(INDIANAPOLIS) - Calling it "one of the biggest pieces of abuse and fraud" he's seen during his two decades in Congress, Sen. Dan Coats (R-Indiana) called on the Internal Revenue Service to better protect millions of taxpayers whose identities are vulnerable because of a secret IRS policy exposed last week by WTHR 13 Investigates.

"I'm outraged. Anybody's Social Security number is personal to that person, and what the IRS is doing is simply unacceptable," Coats told WTHR. "Why are they doing this? That's what I want to know, and we need to make this a much more high priority issue and get to the bottom of this."

The senator is referring to an Eyewitness News investigation that shows how the IRS allows illegal immigrants to "borrow" other people's Social Security numbers to get employment - despite federal law that prohibits undocumented workers from obtaining their own Social Security numbers. The WTHR investigation also showed the IRS actively instructs tax preparers to file undocumented workers' tax returns using both an Individual Taxpayer Identification Number (ITIN) and the Social Security number they "borrowed" to earn income. The practice - which creates an ITIN/SSN mismatch on a tax return - is accepted by the IRS because it allows illegal immigrants to pay billions of dollars taxes. It also allows them to collect billions of dollars in tax refunds and tax credits.

"Here the IRS is taking something that is illegal and actually instructing people to create fraud," Coats said after he watched WTHR's investigation. "That's just simply unacceptable, and it's an abuse of power of this agency. It's either total incompetence or it's just wrong decision making. Either way, we need to get it fixed."

Coats told WTHR he is troubled that the policy has been leading to widespread identity theft -- and that the IRS has a separate, secret policy to then keep victims in the dark. The senator saw a copy of the confidential IRS policy, obtained by 13 Investigates, when he visited WTHR to view the Eyewitness News investigation. He pledged to press the federal agency for answers.

"Now that you've exposed it, it's no longer classified. This is an outrage and it needs to be addressed," Coats said.

He wasted no time.

Last week, IRS Commissioner John Koskinen was ordered to testify before the Senate Finance Committee to explain steps taken by the agency to prevent unfair targeting of political organizations seeking tax-exempt status. Coats, a longtime member of the committee, used the hearing to ask Koskinen about WTHR's investigation and his agency's policies involving employment-related identity theft.

"Can we fix this?" Coats pointedly asked the commissioner.

"It's an important and complicated issue, as you can imagine," responded Koskinen, adding the major focus of the IRS is to collect tax revenues and to allow everyone working in the United States to file a tax return.

"A significant number of those Social Security numbers [used by illegal immigrants] are borrowed or used from relatives or someone else, but we don't where they've come from or why. And our view is if we start pursuing employers and undocumented aliens, then nobody's going to pay their taxes," the commissioner said.

"Well, shouldn't it be in the government's interest also to care for the victims [of identity theft] and put something in place that will give the victim official notification that their Social Security number has been stolen?" asked Coats. "Because it has an impact on the individuals who've been the victims."

Koskinen told senators his agency would be willing to explore solutions.

"We'd be delighted to talk with you further about it and figure out how we can deal with both aspects of it," he said.

"I think that's good. He said he will meet with me and he will meet with our committee," Coats told WTHR after the hearing in Washington. "We need more answers."

The senator is optimistic the Finance Committee and IRS can help develop a plan to prevent employment-related identity theft and to protect those who've already become victims. But then again, Eyewitness News revealed the IRS has known about the problem for more than a decade and has done nothing about it -- despite repeated warnings by the U.S Treasury Department's Inspector General for Tax Administration.

"Do you see anything changing this time?" WTHR asked Coats.

"We need to make it change," he replied. "Either they agree to change this policy and protect us as individual citizens or we will force that issue through committee. I think they like to hide and say 'That's not our responsibility. That's not what we do.' It's time the IRS own up to their responsibility."

A meeting between the IRS and key members of the Finance Committee is expected to take place in the next few weeks. Senate advisors have already had several meetings and discussions with the Inspector General's office to discuss the findings of WTHR's investigation, and possible legislation is also being discussed behind the scenes.

"We're going to force changes, one way or another," Coats said. "We need to get to the bottom of this ... because what's happening right now is simply unfair to people who are working hard and paying their taxes and being good citizens, then being abused by the IRS withholding notification that the IRS has discovered their Social Security number has been stolen. It needs to be fixed."

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