Yesterday wthr.com, an Indiana television station, posted an article about a tax loophole that it costing Americans billions of dollars–it doesn’t involve ‘evil’ corporations or the ‘evil’ rich–it involves a simple IRS tax policy toward legal and illegal aliens who are working in America.
Please watch the video at the link above to hear the entire story. Essentially what is happening is that non-Americans who are working in America are issued an ITIN, an individual taxpayer identification number. A 9-digit ITIN number issued by the IRS provides both resident and nonresident aliens with a unique identification number that allows them to file tax returns. This number is issued to both legal and illegal aliens.
The article reports:
Each spring, at tax preparation offices all across the nation, many illegal immigrants are now eagerly filing tax returns to take advantage of a tax loophole, using their ITIN numbers to get huge refunds from the IRS.
The loophole is called the Additional Child Tax Credit. It’s a fully-refundable credit of up to $1000 per child, and it’s meant to help working families who have children living at home.
But 13 Investigates has found many undocumented workers are claiming the tax credit for kids who live in Mexico – lots of kids in Mexico.
“We’ve seen sometimes 10 or 12 dependents, most times nieces and nephews, on these tax forms,” the whistleblower told Eyewitness News. “The more you put on there, the more you get back.”
Some of the tax refunds generated by this practice have reached $30,000. I wonder if $30,000 was paid in taxes in the first place.
The article posted a statement from the IRS regarding this matter:
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.
Why do I have the feeling that if I start listing my nieces or nephews on my tax return, the IRS will pay me a visit?