IRS Mistakenly ‘Deceased Locked’ Taxpayer Accounts

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Living or Dead? IRS Isn’t Sure and Makes Too Many Deceased Locked.

The Internal Revenue Service (IRS) developed an indicator to lock the accounts of millions of taxpayers whom the agency assumed had died. This is known as Deceased Locked. They did this to prevent identity theft and filing of fraudulent tax returns. Sadly, the indicator seems to have some flaws and for tens of thousands of people, that indicator may have been wrong.

In a recent report by the Treasury Inspector General for Tax Administration examined the IRS’s procedures. This developed from concerns raised that the service was improperly locking the accounts. Doing so prevents taxpayers and their families from filing tax returns and receiving tax refunds. The IRS had locked 52.5 million taxpayer accounts with deceased indicators as of Jan. 20, 2023. The report shows 77,868 taxpayers had potentially erroneous locks. The IRS confirmed that 20,222 taxpayer accounts were locked in error due to both human and computer programming issues.

How Do You Get Deceased Locked?

Incorrect data from the Social Security Administration may be partly to blame for the problem. To fix the problem, the IRS made some programming changes in late January to do an annual reconciliation of the date-of-death information between the SSA’s records and the IRS’s data. The IRS argued that it needed to implement the account locks to deter fraudsters and identity thieves. In the last decade, they noted bad actors used the stolen identities of individual victims and exponentially increased the rate of identity theft-related tax fraud. Deceased individuals, whose names and Social Security Numbers were improperly obtained, represented a significant portion of the identity theft victims.

The IRS updated its programming in January to compare Social Security Data with the information in its own systems. This generated a report on accounts for which there’s no date of death in the SSA records. That list will now be reviewed to identify any accounts that are likely to have been locked erroneously.