The Social Security Administration has just finished mailing out a little letter to all 4 million recipients of Supplemental Security Income, a welfare program for the aged, disabled and blind. The letter asks them to return a little form that gives Social Security officials the right to check IRS records and see if anyone is cheating by not reporting so-called unearned income, usually interest or dividends. Banks and corporations tell the IRS on a Form 1099 how much unearned income people make and it is the 1099s, not the tax return itself, that the SSA would inspect.
If SSI recipients don't give their approval, their benefits will be cut off. This is another extension of the difficult question of whether IRS information can be used for what is essentially an enforcement proceeding. Social Security's deputy commissioner Paul Simmons told United Press International that "The question is whether it is controversial, or should be regarded as controversial, to ask someone on welfare the same thing we ask a middle-class person buying a car, or a mortgage. The car dealer and the credit bureau have more on you than the government has on any of these people." IRS experts are checking to see if they need to write some regulations before Social Security officials show up on the agency's doorstep.