The IRS paid out $4.2 billion in child tax credits in 2010, according to a 2011 report by the Treasury Inspector General for Tax Administration.
That $4.2 billion was paid to 2.3 million ITIN filers here illegally.
An IRS loophole called the Additional Child Tax Credit (ACTC) currently allows undocumented residents to collect the $1,000 credits for dependents not even living in the country.
In 2012, a whistleblower contacted WTHR 13 in Indiana to expose the scheme:
Watchdog has been reporting on the issue:
“The law needs clarification that undocumented immigrants are not eligible,” Sen. CharlesGrassley, R-Iowa, told Watchdog.org in a statement.
To make Congress’ intent clear – that only legal U.S. residents are entitled to ACTC credits — Grassley co-sponsored a clarifying amendment with Sen. Mike Enzi, R-Wy.
“Unfortunately, the majority leader (Harry Reid, D-Nev.) cut off debate, so we weren’t given the chance to offer our amendment,” said Grassley, the top Republican on the Senate Judiciary Committee.
The IRS’ practice of paying out billions to undocumented-immigrant families never received full congressional scrutiny, said David North, a fellow at the enforcement-oriented Center for Immigration Studies.
“I’ve been in government and I know kind of how these things work out,” North told the Washington Times.
“It struck me that (GS) 15s and 16s got together at some point and decided this is how we should handle it, and it stuck,” said North, who wrote “Paying Illegals to Stay,” an analysis of how benefit programs increase illegal immigration.
The IRS has said it doesn’t believe the ACTC law allows the agency to deny payment to undocumented immigrants.
Watchdog’s investigation found that “disbursement of ACTC credits has grown rapidly — and suspiciously — with increased issuance of Individual Taxpayer Identification Numbers as substitutes for Social Security numbers.”
ITIN holders are not required to prove legal residency, and around 1 million ITIN applications are submitted every year.
Some of the organization’s findings are shocking:
Federal investigators identified one address in Atlanta where 23,994 ITIN refunds totaling $46,378,040 were delivered. A single bank account there received 8,393 refunds.
Records indicate that undocumented immigrants in Virginia received $87.9 million in ACTC cash from the IRS. Watchdog reported that $163,711 went to a single address in the tiny eastern shore town of Parksley.
In lightly populated Iowa, Grassley’s home state, undocumented immigrants got an estimated $30 million.
With an average of 15 percent of ACTC refunds directed to undocumented households nationally, North calculates that roughly half of the money went to ITIN holders who paid “little or no income taxes.”
An audit by the Treasury Inspector General for Tax Administration stated:
“We believe legislation is needed to clarify whether or not refundable tax credits such as the ACTC may be paid to filers without a Social Security number. Such a legislative change could result in cost savings to the federal government of $1.8 billion annually.
“As it now stands, the payment of federal funds through this tax benefit appears to provide additional incentive for aliens to enter, reside and work in the U.S. without authorization, which contradicts federal law and policy to remove such incentives.”
The recommendations of that audit, conducted in 2009, have yet to be acted on.
The House of Representatives repeatedly has passed an IRS bill that could save U.S. taxpayers up to $24.4 billion over the next 10 years:
Refundable Child Tax Credit Eligibility Verification Reform Act of 2013 – Amends the Internal Revenue Code, with respect to the child tax credit, to require taxpayers claiming such credit to provide their social security numbers on their tax returns.
Prohibits taxpayers who improperly claimed such credit in a previous year from claiming such credit during a disallowance period of: (1) 2 years for claims made with reckless or intentional disregard of rules governing such credit, or (2) 10 years for fraudulent claims.
Requires the Secretary of the Treasury to prescribe a form for completion by paid income tax preparers in connection with claims for the refundable portion of the child tax credit. Imposes a penalty on preparers who fail to comply with due diligence requirements for claiming the refundable portion of the credit.
Harry Reid’s Democratic Senate wants nothing to do with this. When the bill was introduced in February, he said, “I just think the child tax credit is working just fine, and there’s no need to punish children.”
Perhaps the IRS has just been too busy targeting groups with patriotic and conservative-sounding names to work on resolving this issue.
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Lily Dane is a staff writer for The Daily Sheeple. Her goal is to help people to “Wake the Flock Up!”