Fake kids, false claims cost billions
Fake kids, false claims cost billions
Loophole used by undocumented workers in W. Mich.
Monday, 21 May 2012,
By Ken Kolker
GRAND RAPIDS, Mich. (WOOD) - "So, these are not your children?" the woman was asked through an interpreter.
They were the names of two children on her 2010 federal tax return.
She shook her head. "No."
"And, that is not your name?" a Target 8 investigator asked.
"No."
And, that Social Security number?
"That is not your number?"
She shook her head again.
Her federal 2010 tax return reads like fiction -- written, she said, by a Grand Rapids tax preparer to help get her a much bigger federal tax return. And, it's now gotten her in trouble with the IRS.
This woman is a native of Central America who didn't want to be identified because she has been living in the United States illegally for more than 16 years.
She told Target 8 that she supplied the fake name and fake Social Security number -- the name and number of a woman whose parents she knows. It's the same name she uses at her $32,000-a-year factory job.
"That's a borrowed Social Security number," she said.
But, she said she has no idea how her tax preparer -- known in the Latino community as a notario -- came up with the names of the two children on her 2010 federal tax return.
They did not use the names of her real kids -- all born in the US.
She told Target 8 she turned over her W-2s to a man she'd heard about at work, something she'd done for several years.
He told her, "all we need is your W-2s; you'll get money coming back. You're working, you've paid into these taxes; it's coming back to you, and we'll take care of it."
With a fake Social Security number, she was in line for an earned income tax credit of $1,700 -- a credit that illegal immigrants are not supposed to get.
And those two fake children -- they were going to bring in nearly $2,000 in child tax credits and additional child tax credits.
"In the Latino community, unfortunately, there are a lot of notarios who are unscrupulous, who at this point think or may think they're actually helping people but are really putting people in a bind, are putting people in a position of facing federal criminal charges for tax fraud," said Holland-area attorney Robert Alvarez.
"What I'm talking about is a tax preparer who knowingly has, literally, and I've seen this, a spiral notebook full with the name of the child, the date of birth and the Social Security number."
And, he said, those tax preparers benefit by selling those names and Social Security numbers to illegal immigrants.
"They typically sell the number to the client; they'll say for an additional 400 or 500 bucks, I'll let you use these two dependents, and it will give you this much more in a return," Alvarez said.
He said his office several years ago represented a man who worked for a tax preparer, collecting and selling Social Security numbers. He wouldn't release his name.
"They would convince people to go to this certain tax preparer in order to get a kickback from the use of the Social Security numbers," he said.
A local tax preparer said it's not uncommon for others in the business to take advantage of illegal immigrants. The tax preparer didn't want to be identified.
"I don't want to have more enemies than the ones I have, and I don't want any damage done to my properties."
This whistleblower has reported allegedly fraudulent tax preparers to the IRS -- preparers who are still in business.
"You report, report, report, and I don't see results."
"Meanwhile the taxpayer is suffering. Our money is being used, it's given to people who don't qualify for it."
IRS spokesman Luis D. Garcia said the agency could not comment about whether it had received any complaints about local tax preparers.
A LEGAL LOOPHOLE, AN OPEN DOOR
A legal loophole opens the door for abuse.
Illegal immigrants are required to pay taxes if they make money in the U.S. But, since they can't legally have a Social Security card, they must use a so-called ITIN (Individual Taxpayer Identification Number).
A federal report last year exposed the loophole that allows illegal immigrants with those ITINs to claim thousands in additional child tax credits -- a total of $4 billion in 2010.
"I can understand how people would be unhappy with that, that an illegal alien is recieving money almost in the form of welfare, for lack of a better word," said Don Davis, U.S. Attorney in West Michigan.
And, this is leading to two ways to rip off the government:
- Using phony Social Security numbers, instead of ITINs, to get those earned income tax credits.
- And, claiming phony children to get additional child tax credits.
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Each can mean thousands of dollars to illegal immigrants.
And that takes us back to the woman from Central America.
Her original 2010 tax return, the one with the fake kids, shows who prepared it -- Ruthy Pimentel, vice president of Pimentel Multiple Services of Grand Rapids .
Her husband, Jean, was company president until he got deported last year. A federal source tells Target 8 he was under investigation for money laundering, manufacturing fake documents and stealing and cashing treasury checks.
Through her daughter, Ruthy Pimentel denied filling out fraudulent tax forms. "She puts the information that the client brings to them," her daughter said.
She denied allegations that a man gathers W-2 forms from illegal immigrants.
Pimentel said she believes competitors are trying to hurt her business.
"There are other business owners who want to bring the business and the name Pimentel down because of who knows? Envy?" her daughter said. "It's a lot of people out there just saying things to have us go down."
Alvarez, the Holland attorney, said he couldn't comment on Pimentel because his office has represented members of the family. However, he said he's aware of another tax preparer in Grand Rapids that allegedly sold names and Social Security numbers of children. He wouldn't name that company.
As for the woman from Central America, she said she's gotten none of her tax return money from the IRS for several years. She doesn't know where that money went.
Instead, she said, the IRS started investigating her, and has ordered her to repay the government $4,000 in taxes.
She's afraid if she fights back, she'll get deported.
"If I were a citizen, it would be different; I could fight it."
Fake kids, false claims cost billions | WOOD TV8
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