The IRS, ITINs and Child Tax Credits

The WTHR 13 News in Indiana has brought renewed attention to how the IRS handles income tax returns from illegal immigrants. When an illegal immigrant files a return they will often use an ITIN number (unless they choose to use a fraudulent SSN). WTHR's report focuses on those returns that have claimed Child Tax Credits, allowing the illegal immigrant to receive large tax refunds - often for children not residing in the the U.S.

This is not a new issue; the Center for Immigration Studies has reported on the use of ITIN numbers since 2002 and reported on the Treasury Department reports featured in the WTHR exposé in 2010 and 2011. Regardless, the loophole continues to hemorrhage tax revenue and in depth reporting on topics such as this is rare, particularly in TV news, and hopefully this report helps keep this issue at afloat at a national level.

View video of WTHR's four-part series.

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Harry Reid’s No Illegal Left Behind Policy

For those in the media who suffer mental gyrations over the lack of bipartisanship in Washington, here is a story that exemplifies the obstacle to working together.

We all know that there are sharp disagreements over tax policy and immigration policy, but we can all agree that illegal aliens should not receive $4.2 billion in refundable tax credits. Can we?

Last July, the Treasury Inspector General for Tax Collection released a shocking report detailing how illegal aliens are able to utilize a filing loophole to obtain billions in Additional Child Tax Credit (the refundable portion) funds. While the Earned Income Credit (ETC) is protected from illegals (those who don’t engage in identity theft) because they are only awarded to those who provide a valid Social Security number, the same cannot be said for the ACTC. Illegals can receive the ACTC by merely providing an Individual Taxpayer Identification Number (ITIN) on their 1040 form, which is blithely issued by the IRS. In 2010, according to the report, illegals received $4.2 billion in ACTC payouts. That accounts for roughly 15% of all outlays for that refundable credit.

Last Tuesday, Senators Sessions and Vitter attempted to bring the Child Tax Credit Integrity Preservation Act (S. 577) to the Senate floor for a vote. The bill would merely make the ACTC like the EIC by requiring all recipients to submit a valid identification number for the filer and each child. All this bill would do is ensure that illegals are not entitled to the refundable portion of the child credit. The House already passed such a provision in the bill that repealed and replaced the sequester. This bill should receive unanimous support and become law this week. So who would block unanimous consent?
Well, Harry Reid, of course – and every other Democrat in Washington.

“Seems to me the problem is illegal aliens receiving the credit wherever they are physically, not people outside the country receive the credit —some of whom would qualify for the credit,” Reid said.

“The Vitter-Sessions legislation, however, eliminates the tax credit for filers who are compiling with the law,” Reid continued. “That isn’t a good result. In fact, this legislation that’s proposed here fails to address the issue of the child tax credit being claimed for children not living in the United States. So the problem is not being solved by this legislation. The legislation goes well beyond what’s necessary to stop fraud and the child tax credit program.”

The only problem is that it’s not true. Social Security numbers are available for all green card holders. It works for the earned income credit. Why should this be any different?

This is just one more illustration of how Democrats have no interest in dealing with illegal immigration. They claim that it’s a logistic problem rounding up 12 million people. However, the reality is that all we need to do is stop incentivizing and subsidizing this behavior. Unfortunately, Democrats view the subsidization as a prudent investment in future voters – and they get to implement it with taxpayer dollars.

Harry Reid