Actions Are Needed to Reduce the Risk of Fraudulent Use of Employer Identification Numbers and to Improve the Effectiveness of the Application Process

The Commissioner, Wage and Investment Division, should: Place an indicator on the tax account of those EINs *******2******* ********2******** that can be used to identify when these EINs are used to file business tax returns or other tax documents, such as Forms W-2, Wage and Tax Statement, or Forms 1099, Miscellaneous Income, to ensure the validity of these filings.

The Commissioner, Wage and Investment Division, should: Expand fraud filters to identify potentially fraudulent tax return filings that use an *****2****** report income and withholding.

The Commissioner, Wage and Investment Division, should correct programming to reject EIN applications when an EIN has previously been assigned to the same sole proprietor and to reject applications when IRS data indicate that the sole proprietor is deceased.

The Commissioner, Wage and Investment Division, should review the 206,920 EINs incorrectly assigned as duplicates to sole proprietors and the 20,437 assigned to sole proprietors who were deceased. Determine if the EINs should be merged or deactivated.

The Commissioner, Wage and Investment Division, should perform an assessment to determine how an additional field could be added to the Business Master File so that both the decedent SSN and a responsible party TIN can be captured for estates and trusts.