Tax Cut Bill to Stop Cash Payments to Illegal Immigrants

House version of tax reform would require Social Security number to get the 'additional child tax credit'

by Brendan Kirby | Updated 20 Nov 2017 at 7:40 AM

Buried in the tax reform bill the House of Representatives passed last week is a small provision — one long advocated by immigration hawks — to close a loophole that allows illegal immigrants to get cash from the government.

Congress prohibited such transfer payments in 1996, but the Internal Revenue Service’s interpretation is that the prohibition does not apply to a government assistance program created after that statute. Known as the additional child tax credit, the program is designed for low-income people whose tax burden is too low to qualify for the regular $1,000-per-child credit. It allows families, in other words, to get more money back on their tax returns than they originally pay.

Illegal immigrants with an Individual Tax Identification Number, or ITIN — which is available to any worker in America who does not have a Social Security number — can claim the additional child tax credit. The House version of the Tax Cuts and Jobs Act includes language that would bar that practice by requiring a Social Security number to be eligible for the payment.

"Hoosiers get it," Rep. Luke Messer (R-Ind.) said during last week's House debate. "No one should get a tax incentive to violate the law."

Messer, who is running for the Senate in 2018, is responsible for inserting the provision into the tax bill. It is similar to stand-alone legislation he sponsored in January. He also persuaded President Donald Trump to include the change in his budget request.

Messer became interested in the program after an investigative series on the issue by an Indiana television station. The WTHR series in 2012 found that illegal immigrants were receiving money for their children and other relatives who did not even live in the United States. A Senate Finance Committee staffer said he believes the provision will be in the final bill on which the Senate ultimately votes.

"It's about time the IRS and the rest of the federal government blocked access to benefits by illegal aliens."

It is unclear how much money the federal government pays to illegal immigrants under the program, but a 2014 report from the Treasury Department's inspector general for tax administration estimated that improper payments under the additional child tax credit accounted for 25.2 percent to 30.5 percent of the total in 2013. That would translate to $5.9 billion to $7.1 billion, a major portion of which went to illegal immigrants.

In the context of a bill that includes $1.5 trillion in tax cuts over 10 years, the amount of improper payments under the additional child tax credit program may seem paltry. But advocates of tighter immigration enforcement said it is important to shut off incentives that attract illegal immigrants.

"It's about time the IRS and the rest of the federal government blocked access to benefits by illegal aliens," said Jessica Vaughan, director of policy studies at the Washington-based Center for Immigration Studies. "The ITIN has never been intended to be identification."

Chris Chmielenski, director of content and activism at NumbersUSA, said tax loopholes that benefit illegal immigrants tend to draw comparatively little attention because other issues loom larger.

"We grade those tax credit bills, but we give them a very, very small amount of points because it's not our focus," he said.

Related: Trump Budget Stops Cash Payments to Illegal Immigrants

The same goes for lawmakers, Chmielenski said.

"It's not big enough that members of Congress are willing to go out and campaign on," he said. "So it gets ignored."

Vaughan said the actual cost savings of any specific government program is not the only consideration, however.

"It's a step in the right direction," she said. "It might not save a whole lot of money, but it will eliminate an opportunity for fraud."

(photo credit, homepage image: Reform Immigration March on Washington..., CC BY-SA 2.0, by Elvert Barnes; photo credit, article images: Reform Immigration March on Washington...CC BY-SA 2.0, by Elvert Barnes)

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