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you should check with the Social Security Adm because it is they who tell the IRS about deceased taxpayers. all it takes is a small mixup on the death certificate for some other person to create this kind of problem.
I would have to guess that it is due to identity theft. 1M new illegal immigrants per year need a SSN to work, so they sometimes get one that is already being used.
I actually contacted them and they said that on their records the number is correct and matches the name and DOB and they don't have any death certificate or anything on file suggestings that she's deceased. They didn't know what to do really.
You will need to contact the IRS for further information in this matter. Please see this TurboTax FAQ here for assistance. You will need to contact them for navigating this issue.
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