​Ghosts busted: Faulty Social Security records show 6.5mn Americans age 112

Reuters / Andy Clark
An error in the social insurance program’s database, which lists US citizens from as far back as 1869, has opened up a back door to fraudulent tax claims and other types of abuses, US officials warn.

The Social Security administration made a startling discovery when it matched the records of people born before 1901 with a so-called Death Master File: 6.5 million people were technically still alive, an impossibility given that as of last year there were less than 50 people of that age in the whole world.

The oldest person who still appears in the agency’s files without a death certificate was born in 1869, according to a report by the agency's inspector general, AP reported.

The report noted that from 2006 to 2011, nearly 67,000 of the Social Security numbers were used to report more than $3 billion in sources of income, including tips and income from self-employment. One Social Security number was used 613 times, while an additional 194 numbers were used at least 50 times each, it said.

Of the millions of records still active in Social Security’s database, only 13 are still receiving their state benefits, the report said. However, the flaw in the database could open up a number of ways for the system to be abused.

The Internal Revenue Service estimated it paid out $5.8 billion in fraudulent tax refunds in 2013 due to identity theft.

"The plan is frighteningly simple — steal Social Security numbers, file tax returns showing a false refund claim, and then have the refunds electronically deposited or sent to an address where the offender can access the refund checks," Caroline Ciraolo, head of the Justice Department's tax division, told a congressional hearing recently.

"That is a real problem," said Sen. Ron Johnson, who is chairman of the Senate Committee on Homeland Security and Governmental Affairs. "When you have a fake Social Security number, that's what allows you to fraudulently do all kinds things, claim things like the earned income tax credit or other tax benefits."

Sean Brune, a senior adviser to the agency's deputy commissioner for budget, finance, quality and management told AP the records under inspection “are extremely old, decades-old and unreliable."

Brune noted the report assumed the individuals on file are dead because of their advanced age.

Homeland Security will open hearings on Monday to consider the problem of missing death records by the massive government agency that in 2013 had $1.3 trillion in total expenditures.