Illegals getting Tax credits and Refunds?!
INDIANAPOLIS – Congressman Dan Burton (R – Ind) is frustrated – very frustrated – after learning the details of an Eyewitness News investigation.
“Why in the world are we doing this?” he asked. “Are you kidding me? The cost to the American tax payer is huge!”
The veteran lawmaker is responding to what 13 Investigates discovered all across Indiana: illegal immigrants getting big tax refunds from the Internal Revenue Service thanks to a loophole in federal law.
MORE: Tax loophole costs billions
The loophole allows undocumented workers to collect what’s called an additional child tax credit. The credit – up to $1,000 per child – can be claimed even by families who pay nothing in taxes, in many cases resulting in a cash payment from the IRS. It is intended for working families with children who live in the same home.
But a local tax preparer came to Eyewitness News to blow the whistle on millions of people who, he believes, are taking advantage of the system. He says many illegal immigrants are claiming the tax credit for children who’ve never lived in this country, and he showed 13 Investigates dozens of redacted tax returns to prove his point.
“There is not a doubt in my mind there is huge fraud taking place here,” said the whistleblower, who asked not to be identified for fear of reprisal. “I can bring out stacks and stacks. It’s just so easy it’s ridiculous.”
Exposing the loophole
An undocumented worker in southern Indiana told 13 Investigates just how easy it truly is.
He said four other illegal immigrants file tax returns using his address, even though none of them actually lives there. And he said this year, those four workers filed tax returns claiming 20 children live inside his small trailer home. As a result, the IRS sent the illegal immigrants tax refunds totaling more than $29,000.
But none of the 20 children listed as dependents on the tax returns lives in Indiana – or even in the United States.
“No, they don’t live here,” admitted the undocumented worker, who lives with his young daughter. “The other kids are in their country of origin, which is Mexico.”
The IRS granted tax credits for the 20 children anyway, even though the agency’s own policy states they are not eligible. (Children are eligible for additional child tax credits only if they are US citizens or minor resident aliens who live in the US with a tax filer for more than half of a calendar year.)
According to WTHR’s whistleblower, cases like this one are commonplace because the IRS does little to verify the eligibility of both the undocumented workers filing for additional child tax credits and the dependents listed on their tax returns.
13 Investigates has confirmed it’s a growing problem. It’s nationwide. And it’s out of control.
Billions already paid
Eyewitness News obtained US Treasury Department audit reports that show illegal immigrants now get additional child tax credits totaling $4.2 billion dollars each year. The department’s Inspector General for Tax Administration has repeatedly warned the IRS that undocumented workers are abusing the additional child tax credit.
“Millions of people are seeking this credit who, we believe, are not entitled to it,” said inspector general Russell George. “We have made recommendations to [IRS] as to how they could address this and they have not taken sufficient action in our view to solve the problem. It’s very troubling.”
Why has the IRS done nothing?
Despite phone calls, emails, even a visit to IRS headquarters in Washington to get answers, no one at the IRS would meet with WTHR.
The agency instead sent 13 Investigates a short statement (see below) saying it is following the law, and current tax law does not prevent undocumented workers from getting additional child tax credits. The IRS claims it can’t change that without a new law.
Rep. Burton and other lawmakers are now ready to act.
Lawmakers looking for a fix
“We’ve got to deal with it,” he said. “I knew this was a problem, but until hearing what you found, I didn’t know it was this severe.”
Rep. Burton and dozens of other House Republicans have co-sponsored a bill that would essentially authorize additional child tax credits only for US citizens. House Resolution 1956 would require tax filers to provide a valid social security number to receive an additional child tax credit.
The IRS provides illegal immigrants with an ITIN (individual taxpayer identification number) so they can file tax returns, but most undocumented workers are not eligible to receive a social security number.
HR 1956 has sat idle in the House Ways and Means Committee for almost a year.
However, language from the bill is now included in a package of proposed budget savings measures that House lawmakers are expected to consider in May. While the budget package may have enough support to pass the House, it is expected to die a quick death in the Democratic-controlled Senate.
“This should not be a partisan issue because we’re all concerned about saving taxpayer dollars and not wasting them on fraudulent things like this,” said Rep. Burton. “But I don’t think Democrats want to deal with this with right now.”
Not all Democrats are opposed to limiting additional child tax credits to US citizens.
Last fall, Senator Claire McCaskill (D – Mo) sent a letter to IRS Commissioner Douglas Shulman asking him to stop the agency’s payments of additional child tax credits to undocumented workers. “This is deeply problematic and must be remedied,” the senator wrote.
But few other Democratic lawmakers have voiced support for eliminating the child tax credits for undocumented workers.
Republicans plan to keep pushing the issue forward.
“This rampant abuse of hardworking taxpayer dollars is just wrong,” said Rep. Sam Johnson (R – Tex), who authored HR 1956. “It’s time we close this tax loophole and put a stop to the child tax credit sham.”
Rep. Burton agrees.
“I’m a taxpayer, and the thought of me paying for 24 people who are living in one trailer boggles my mind, especially when you tell me most of them are still living in Mexico. That’s unconscionable.” he said.
“Who’s going to help?”
Many undocumented workers see the issue very differently.
“It’s not taking advantage. I’m very thankful to this country for the help it gives me,” said an illegal immigrant in central Indiana, who decided to talk with 13 Investigates as long as we agreed not to reveal his identity.
The worker has lived in the United States for 14 years. He owns a home in Indiana, pays taxes and is raising three children who are all honor roll students. This year, he received a $9,000 tax refund that includes additional child tax credits – not only for his children who live in Indiana, but also for four nieces and nephews in Mexico.
The tax credits help him care for his young family members south of the border, and he says attempts by Congress to revoke the credits could have dire consequences.
“Who’s going to help them if they’re not eligible … to avoid them ending up in the drug mafia, begging in the street, being raped? What happens when they get sick?” he asked. “There’s a lot of things that could happen to them if you don’t help … When you come here [to the United States], to your family down there, you are their hope.”
Taking additional child tax credits away from undocumented workers would also have an impact on millions of children legally living in this country. Children of illegal immigrants who are born in the US are legal US citizens and, in many cases, those children would no longer be eligible to receive the tax credits under proposals like HR 1956.
But the inspector general insists refundable tax credits were never intended for illegal immigrants – let alone people who’ve never stepped foot in the United States.
“It’s being abused by people who are not entitled to use it, and that’s problematic,” George told Eyewitness News.
“It’s cheating the American taxpayer,” agreed Burton. “We all believe in humanity and humanitarianism, but we’ve got a $15 trillion national debt. We can’t subsidize the whole world.”
What can you do?
Congress may be voting on a budget measure in the coming weeks, and a budget reconciliation package now being considered in the House of Representatives contains language that would limit additional child tax credits to US citizens with a valid social security number. If you feel strongly about this issue – one way or another – now is a good time to let your lawmakers know. Their contact information is listed below:
US Representatives – Indiana
District
Name
Party
Phone
1
Visclosky, Peter
D
202-225-2461
2
Donnelly, Joe
D
202-225-3915
3
Stutzman, Marlin
R
202-225-4436
4
Rokita, Todd
R
202-225-5037
5
Burton, Dan
R
202-225-2276
6
Pence, Mike
R
202-225-3021
7
Carson, André
D
202-225-4011
8
Bucshon, Larry
R
202-225-4636
9
Young, Todd
R
202-225-5315
US Senate – Indiana
Daniel Coats (R)
493 Russell Senate Office Building
Washington, DC 20510
(202) 224-5623
www.coats.senate.gov/contact/
Richard Lugar (R)
306 Hart Senate Office Building
Washington, DC 20510
(202) 224-4814
www.lugar.senate.gov/contact/
US Representatives – All states
Contact Information
US Senate – All States
Contact Information
Full statement to WTHR from the Internal Revenue Service:
The law has been clear for over a decade that eligibility for these credits does not depend on work authorization status or the type of taxpayer identification number used. Any suggestion that the IRS shouldn’t be paying out these credits under current law to ITIN holders is simply incorrect. The IRS administers the law impartially and applies it as it is written. If the law were changed, the IRS would change its programs accordingly. The IRS disagrees with TIGTA’s recommendation on requiring additional documentation to verify child credit claims. As TIGTA acknowledges in this report, the IRS does not currently have the legal authority to verify and disallow the Child Tax Credit and the Additional Child Tax Credit during return processing simply because of the lack of documentation. The IRS has procedures in place specifically for the evaluation of questionable credit claims early in the processing stream and prior to issuance of a refund. The IRS continues to work to refine and improve our processes.
US election 2012: Sending home the illegal immigrants
Proposal would require Missouri schools to verify students’ immigration status
Missouri could be the next battleground in a nationwide fight over tougher immigration laws.
State Sen. Will Kraus, a Lee’s Summit Republican, is sponsoring a bill that would mandate that all public schools verify the immigration status of enrollees. It also would require law enforcement officers to check immigration status on all stops when they have reasonable cause, and create a state misdemeanor for not carrying proper citizenship documentation.
The U.S. Department of Justice last year sued to block similar laws after they were passed in Alabama and Arizona. Federal judges have blocked implementation of parts of the laws in both states, with the U.S. Supreme Court agreeing to hear arguments on Arizona’s law sometime this year.
Vanessa Crawford, executive director of Missouri Immigration and Refugee Advocates, said Kraus’ bill unfairly focuses on immigrants and their families and opens the state up to future litigation.
“This bill is a really bad idea,” Crawford said. “This would force police and school officials to act as immigration agents, and would result in innocent people facing harassment. And passing a law that will undoubtedly end up in court is irresponsible.”
The U.S. Supreme Court has repeatedly upheld its 1982 ruling that children have a right to attend public schools regardless of their immigration status.
But Kraus said his bill does nothing to challenge that notion. “This is simply an attempt to track noncitizens in public schools in order to get an accurate set of data,” he said.
The motivation for the bill, Kraus said, was his push last session to pass legislation forcing Attorney General Chris Koster, a Democrat, to sue the federal government to recoup the cost of enforcing federal immigration laws.
“One of the objections we encountered was that there was no known cost to the state. Based on those comments, I asked my office to reach out to state agencies to find out who actually tracked the cost of illegal immigration on Missouri taxpayers,” Kraus said. “The results were underwhelming as we found most agencies have no idea of the true cost to taxpayers.”
Kraus’ bill would require that schools turn data collected over to the state Board of Education, which would compile and submit an annual report to the General Assembly. The report would contain information regarding immigration classifications of enrolled students and numbers of participants in English as a second language programs, as well as the cost to the state of their education.
The report also would attempt to analyze the impact of educating noncitizens on the quality of education provided to students who are citizens.
Even though schools would be required to ask new students for either a birth certificate or proof they are in the country legally, they would still able to attend school even if they or their parents are in the country illegally, Kraus said.
Public disclosure of information that identifies a student would be prohibited.
Critics, however, dismissed the bill as nothing more than a step toward revoking the rights of immigrant children to an education.
“This law will instill fear in immigrant families that will result in children being pulled out of school,” Crawford said.
After the Alabama law went into effect, schools reported higher absentee rates for Hispanic students. Airick Leonard West, board president of Kansas City Public Schools, said a similar reaction can be expected in Missouri.
“At a time when our district needs to gain the trust and cooperation of parents to increase our average daily attendance — one of the standards of accreditation — this bill sabotages that effort by creating a hostile and intimidating relationship between our district and its families,” West said.
As for the police provisions of the bill, Kraus said officers already check immigration status after arrests. His bill simply would extend that to include all stops, he argued. And the new state misdemeanor simply mirrors federal law.
“None of these proposed items have any significant punitive provision above what is already in current federal law,” Kraus said.
So far, the bill — S.B. 590 — has not been scheduled for a hearing. Kraus said he plans to discuss it with Republican leadership in the hopes of making the legislation a priority this session. He also expected any legal challenges to similar laws around the country to be finalized before any Missouri law would go into effect.
Groups opposing the measure, however, hope to derail it before it gains traction. Crawford points to efforts her organization launched during the last session that helped kill a bill requiring driver’s license tests to be administered only in English, and eliminated versions currently offered in 11 other languages.
Read more here: http://www.kansascity.com/2012/01/12/3366206/proposal-would-require-missouri.html#storylink=cpy
