1987 tax year. This massive disappearance occurred because the IRS began requiring taxpayers to list Social Security numbers for any dependents over age 5, making it impossible to continue claiming “phantom” dependents. 

• The Cause: The Tax Reform Act of 1986 introduced the requirement for Social Security numbers on 1987 returns to curb fraud.
• The Impact: In 1986, 77 million dependents were listed; in 1987, only 70 million were reported.
• Further Declines: A similar event occurred in 1989, when child-care providers had to be identified, resulting in a drop in claimed child-care credits.
• Result: The IRS determined many of the “missing” children were fabricated, though some cases involved double-claimed children from divorce.