The president’s proposed 2018 budget would put a stop to a government program that has paid out more than $35 billion over the past ten years to illegal immigrants in lump-sum payments, disguised as a “tax credit.”
The use of the credit by illegal immigrants, which has allowed them to get up to $1,000 for each child they claim, including children who are not theirs and who don’t live in the United States, has been referred to as “a multi-billion-dollar fraud scheme” that has taken money out of the hands of hard-working Americans.
“It’s a huge expense coming out of the pocket of American taxpayers.”
It’s called the “Additional Child Tax Credit” — but in application it is not really a credit at all.
Thousands of illegal immigrants file tax returns every year using a taxpayer identification number issued by the IRS called an ITIN. Mark Krikorian of the Center for Immigration Studies says there is no reason for anyone but an illegal immigrant to use an ITIN to file a tax return: Even legal residents who are not citizens would have a Social Security card. And the only reason people working here illegally would file a return is to get money, through a “credit” that counts against the taxes paid, and then sends them the remaining amount.
The regular Child Tax Credit, which is claimed by virtually Americans who have children, requires filers to use a Social Security number. The Additional Child Tax Credit, meanwhile, can be claimed on a return using an ITIN. Only the Additional Child Tax Credit involves getting a check in the mail if the filer paid less in taxes than the total amount of the credit.
In 2009, a stunning 2.3 million people claimed the Additional Child Tax Credit using an ITIN, according to a 2011 Treasury Department report , and got $4.2 billion in refunds. All of these, or virtually all, are presumed by the Treasury Department to be people who are not authorized to work in the United States.
The average amount of the refund was $1,800, but the report noted that 9,000 people got $10,000 or more by filing multiple tax returns for several prior years — getting a combined $1 billion.
A 2015 law delayed the payout of all Additional Child Tax Credits to allow the IRS time to check for fraud. But little else has been done, and the IRS has continued to accept returns filed using ITINs, and has continued to pay out billions of dollars to illegal immigrants.
In the overview of the president’s budget, released this week, it says that the Child Tax Credit, and also the Earned Income Tax Credit will be limited to “those who are authorized to work in the United States.”
It’s been a long time coming. For years, the Treasury Department’s inspector general has warned the IRS to close the loophole that allows illegal immigrants to claim the so-called credit.
“It’s just a farce to say it was created to collect taxes,” Robert Rector, a domestic expert at the Heritage Foundation told Fox News in February. “It’s nothing but a welfare program designed for illegal immigrants.”
In 2012, a tax preparer in Indiana went to local TV station Channel 13 in Indianapolis in distress, saying his office had been flooded by illegal immigrants wanting to file returns to claim the “credit” and showed them returns he’d processed for the illegal immigrants, claiming nieces and nephew who live in Mexico as their own children and getting more than $10,000 from the federal government.
A reporter from the station went out and interviewed  one of the immigrants, a Mexican man living in a trailer. The man admitted that he’d filed four returns for four people listing that address, claiming 20 children. “No, they don’t live here,” he said in Spanish, when asked whether the children he claimed were here in the United States. “They live in their country — Mexico.” he said. The total payment from the IRS for the 20 children was $29,608.
Americans may wonder how it is possible that illegal immigrants can be eligible for what amounts to cash payments from the federal government and are working here illegally, and some might suggest that perhaps a new law is needed to stop this.
But in fact, there is already a law that forbids illegal immigrants from getting welfare benefits. In the case of the Additional Child Tax Credit, the IRS has claimed that it doesn’t have the authority to deny the credit just because an ITIN is used.
The Additional Child Tax Credit was created in 1996, but until 2001, only those who had Social Security taxes exceeding the credit were eligible. In that year, Congress passed a new law that made it much easier to claim the "credit" and allowed for a "refund." The number of people claiming the credit has risen dramatically ever since.
LifeZette estimates, based on the Treasury Inspector General for Tax Administration numbers from select processing years, including 2005 and 2010, that the IRS has paid out more than $35 billion to illegal immigrants since 2001 in what may be one of the worst cases of tax fraud in American history.