‘Death Master List’ Paves Way for More Identity Theft

What started as a legitimate attempt to prevent identify theft has instead resulted in a ripe opportunity for criminal activity.

According to recent reports, for as little as $10, criminals have been able to easily access the Social Security numbers of deceased Americans and misuse them. This “Death Master List,” as it’s called, is available online through the Department of Commerce’s National Technical Information Service (NTIS). This file contains vital personal information on millions of Americans and has been misused for years to easily commit identity theft and tax fraud.

As the result of lax security provisions, more than 1.3 million falsified tax returns were filed by identity thieves last year using stolen social security information from people who are deceased.

720,000 Fraudulent Tax Returns

Within the first three months of 2012, the Internal Revenue Service (IRS) identified at least 720,000 fraudulent tax returns created using data from the files of recently deceased taxpayers. Essentially, this is money stolen from the government through the misuse of personal information. It is suspected the actual number of fraudulent filings is larger as it’s likely a large number that have gone undetected over the years.

This master file was originally compiled by the Social Security Administration and made available for purchase through the Department of Commerce. The practice of sharing such information began back in 1980 when the agency came to a consent agreement to release death information as the result of a Freedom of Information Act lawsuit.

The original intention of the ‘Death Master List’ release was to allow more than 450 companies, such as financial institutions, security firms, insurance companies as well as state and local governments to cross-reference applicants with death records and thereby prevent identity theft. This information is also distributed to hospitals, universities and genealogy services.

The database includes additional personal facts that can be used to steal an identity, such as full name, date of birth, and the date of death. The entire database can be purchased for less than $2,000.

Instead, according to Pennsylvania Democrat Senator Bob Casey, the agency is inadvertently facilitating tax fraud by permitting the general public to access such files.

Casey: Kill ‘Death Master File’

In July, Casey addressed the both the Social Security Administration (SSA) and the Office of Management and Budget (OMB) in a letter explaining the need for immediate change as the Death Master File has played a significant role in the increase of identity thefts. Information within the master file, he said, needs to be restricted to those with a legitimate need and the means to keep the information secure.

As a result of the increase of identity theft cases, the IRS has increased its criminal prosecutions and has created a program to allow information from other law enforcement agencies to identify those taxpayers whose identities are recognized as being stolen.

While the IRS has taken significant steps to alleviate fraudulent returns through the use of filters before a refund check is written, he still believes identify theft continues to cost Americans billions of dollars a year in identity theft.

The Treasury Inspector General for Tax Administration estimated before House Ways and Means in May 2012, that the IRS will pay out at least $26 billion in falsified tax refunds as the result of identity theft over the next five years if something is not done to combat this issue.