Americans Subsidize Aliens’ Tax Rebates; Congress Does Nothing

Three weeks ago, an Indiana accountant turned whistle blower exposed the decade-old practice among illegal aliens of fraudulently collecting cash refunds for child tax credits. Local network WTHR broadcast the story that sparked an Internet frenzy creating outrage among citizens.

According to the accountant, thousands of aliens file false returns claiming, in addition to their own children, neighbors, nieces and nephews. In some cases, even though some of the children may not be their own relatives or live in the United States, filers receive $1,000 per child. Said the accountant, “It’s so easy it’s ridiculous.”

Crucial to the rip-off are Individual Tax Identification Numbers (ITINs) which the Internal Revenue Service issues to all employed workers who pay taxes regardless of their immigration status. Once the aliens file using their ITINs, they’re home free.

Russell George, the Treasury Inspector General for Tax Administration has been hounding Congress for years to close the loophole, something that would be a simple matter of re-writing the tax code and making it mandatory that filers use a valid social security number.

Pursuant to an IG report, 72 percent of tax returns filed by ITIN users claimed the Additional Child Tax Credit compared to just 14 percent of returns filed with social security numbers. The bottom line cost to American taxpayers is $4.2 billion annually.

Since its original broadcast, WTHR heard back from several frustrated former and current IRS employees who described the agency’s pressure-packed policy to process as many ITIN applications as possible even though the applications are obviously fraudulent.

One INS employee said that during a recent day, he saw the same ITIN documentation including the same photographs and signatures “dozens of times.” According to one disgruntled worker even though the ITIN’s supporting paper work is clearly fake, the employees are forced to process “X amount in an hour or you don’t get your pay grade raise or that great evaluation. You have to kick them out as quickly as possible if you want to keep your job.”

In short, the IRS which would assess American citizens with fines, penalties or possible jail time for such overt misrepresentation, ignores illegal immigrants’ blatant deceit.

Of the multiple problems Congress faces, correcting the ITIN scandal would be the easiest to resolve—by following Inspector General George’s recommendation to change the tax code to require valid social security numbers on returns.

The House, at least, has taken the first step. Rep. Sam Johnson (R-TX) introduced a provision that would prevent illegal aliens from collecting the additional tax child credit. Johnson’s proposal was added to a budget reconciliation bill (H.R. 5652) that the House passed.

However, the Democratic-controlled Senate is unlikely to support the House. Last week, Senator David Vitter (R-LA) introduced S. 577 that duplicates Johnson’s language. But Majority Leader Harry Reid blocked Senator Jeff Sessions and Vitter’s proposal to ask for unanimous consent on S. 577.

Sessions blasted Reid, the IRS and President Obama for their collective refusal to act in Americans’ best interests. Sessions, noting that the $4 billion annual cost would meet the remaining highway bill’s funding shortfall for the highway bill and much of the student loan bill’s cost, said: “This should not be a partisan issue: it is wrong for the government to use Americans’ tax dollars to directly subsidize illegality, especially at a time when our nation is spending so much money we don’t have.”

For U.S. citizens, the ITIN flimflam is one more example of their second class status—not that more evidence is needed. Nevertheless, the congressionally sanctioned sting is a deeply insulting affront to honest, hard working Americans.

Joe Guzzardi is a Californians for Population Stabilization Senior Writing Fellow.