Illegals Collected Nearly $5.9 Billion in Improper Child Tax Credit

by Team DML/ March 23, 2016

Illegal Aliens collected majority of the $5.9 billion in improper Child Tax Credits paid by the IRS in FY2013.

The Federation for American Immigration Reform reported yesterday that the House Ways and Means Committee passed by a 21-15 vote key legislation by Rep. Sam Johnson (R-TX) last Wednesday that would close a loophole under current tax law that allows illegal aliens to collect the Additional Child Tax Credit (ACTC). (CQ News, Mar. 16, 2016)

The ACTC is a refundable credit that allows individuals with three or more children to reduce their federal income tax by up to $1,000 for each child who meets certain criteria. The ACTC is attractive to illegal aliens because a valid social security number (which illegal aliens lack) is not required to claim the credit. Instead, federal tax law allows a filer to claim the credit using an Individual Taxpayer Identification Number (ITIN). The Internal Revenue Service freely issues ITINs to illegal aliens so they can comply with federal tax law (even though they are violating immigration laws).

According to the Treasury Department Inspector General, the Internal Revenue Service paid out at least $5.9 billion in improper ACTC payments in Fiscal Year 2013, or about 25 to 30 percent of the total payments. (Politico, Dec. 9, 2014) An overwhelming amount of the fraudulent payments go to illegal aliens.

For example, an Indianapolis television station uncovered in April 2012 that four illegal aliens alone, sharing a small trailer received $29,608 from the IRS by claiming tax credits for 20 nieces and nephews who live in Mexico. (13 WTHR, Apr. 26, 2012) Investigators identified one address in Atlanta where 23,994 ITIN-related tax refunds were sent, including 8,393 refunds deposited into a single bank account. (Washington Times, Oct. 14, 2014) Further, the Washington Times found the use of the tax credit by illegal aliens jumped from 796,000 in 2005 to 1.5 million in 2008 and 2.3 million in 2010. (Id.)