How does use of ITINs versus stolen/borrowed SSNs affect tax compliance estimates?
Executive summary
ITINs are a tax-processing tool the IRS uses to bring people without eligible Social Security numbers into the tax system, which changes observable compliance patterns because ITIN filers face different eligibility for credits and different administrative constraints than SSN filers [1] [2]. The reporting reviewed does not quantify how stolen or borrowed SSNs affect aggregate compliance estimates, so analysis must combine documented ITIN effects with transparent limits where evidence on SSN misuse is absent [3].
1. ITINs function as an observable compliance channel
The IRS issues Individual Taxpayer Identification Numbers (ITINs) to people required to file taxes who are not eligible for Social Security numbers, and those ITINs permit the IRS to receive returns, process payments, and match income to returns in ways that would otherwise be invisible if no TIN were provided [1] [2]. Because ITINs allow filing but explicitly do not confer work authorization or Social Security benefits, they create a separate population of filers who can be tallied and measured by the IRS without being conflated with SSN-based wage reporting [4] [5].
2. Different benefit and credit rules change measured compliance
Tax outcomes for ITIN filers diverge from SSN filers because several major credits require valid SSNs—most notably the Earned Income Tax Credit—so ITIN-based filings will systematically show lower claim rates for those credits and therefore different refund and liability patterns than SSN filings, altering compliance estimates derived from returns data [6]. That difference is a real measurement effect: ITIN users may still pay income tax, but the observable distribution of credits, liabilities, and refunds shifts relative to SSN populations [2] [6].
3. Administrative controls and withholding shape compliance signals
Payers use a TIN (SSN, EIN, or ITIN) to avoid backup withholding; failure to provide a correct TIN can trigger mandatory backup withholding at a flat rate (24% in 2026), producing immediate administrative friction that both enforces collection and changes cash flows for noncompliant payees [7]. Thus, the presence of an ITIN on W‑9s or 1099s reduces the incidence of backup withholding compared with missing or incorrect TINs, and that administrative distinction shows up in compliance statistics tied to withholding and reported income [7] [1].
4. Stolen or borrowed SSNs: reporting gaps and plausible effects
The supplied sources do not document how stolen or borrowed SSNs quantitatively change IRS compliance estimates, so any assertion here must be provisional: logically, if SSNs in use are from people other than the true earner, wage‑reporting matches and withholding histories will be distorted and the IRS’s identity/income matching is likely to misattribute earnings, refunds, or credits; however, that mechanism and its scale are not described in the cited materials and cannot be certified here (no direct source). Researchers and policymakers therefore face an evidence gap: robust measurement of misused SSNs requires linkage studies and enforcement data that the present reporting set does not provide.
5. Measurement bias: how ITIN uptake and SSN misuse pull estimates in opposite directions
Bringing more taxpayers into the system with ITINs tends to increase measured compliance because returns and payments become observable [2] [1], yet those ITIN returns are restricted in credit claims and may understate true economic vulnerability or refundable-credit take-up [6]. Conversely, if SSNs are borrowed or stolen—a scenario not documented by these sources—apparent compliance could look artificially higher or misallocated, hiding nonfiling or nonpayment by the true income earner; that risk of misattribution is real in concept but remains empirically unquantified in the reviewed material.
6. Policy implications and the data priorities
The reporting implies clear policy levers: expand and streamline ITIN issuance and renewal to reduce reporting friction and preserve observable compliance [3] [8], maintain rigorous TIN validation on W‑9/1099 processes to limit backup withholding triggers and mismatches [7], and invest in empirical studies of SSN misuse because existing guidance does not reveal the magnitude or tax‑estimate bias from stolen/borrowed SSNs [7] [1]. Those steps would tighten the link between observed filings and real economic activity, but current sources leave the SSN‑misuse question unresolved.