It is illegal, you probably already knew it. Some other possilbe problems somebody who let other people use his SS number is
1. Tax: More income you have, higher tax rate you will pay and less tax benefit you will get. –> If somebody else report his income with your SS number(their employer will report your SS number to IRS), you are responsible of taxes at the higher rate than your normal rate and you may not eligible some deductions due to these extra income. It is not easy to calculate what the real impact of these extra incomes on your tax bills. If you did not include his inocme on your tax report because he fails inform you, you are responsible all the taxes and penalty to IRS.
2. Credit or Identity theft: If somebody else know your SS nubmer, it is easy for him to open credit card or get the loan with that number(your name), and they do not pay, your credit will be hurt.
