ITIN Regulations Revised: More Favorable to Aliens

Published on September 24th, 2014

Here’s an under-the-radar scandal that should get your dander up. The Internal Revenue Service recently reported that it would abolish the automatic expiration date for aliens’ Individual Taxpayer Identification Number (ITINs). According to previous IRS guidelines, aliens had to renew the number every five years and file a tax return in at least one of those years.

The official IRS statement: “The IRS will not deactivate an ITIN that has been used on at least one tax return in the past five years. To give all interested parties time to adjust and allow the IRS to reprogram its systems, the IRS will not begin deactivating ITINs until 2016. The new, more uniform policy applies to any ITIN, regardless of when it was issued.”

“Ask for your ITIN, We’ll Help You”

Smart money bets on another postponement when 2016 rolls around.

ITINs are a federally created convenience for illegal immigrants who don’t have and can’t qualify for a Social Security card. An ITIN number allows an alien to pay taxes. Incongruously, federal law prohibits illegal immigrants from holding jobs.

Moreover, the ITIN has a long history of fraud including the central role it played in the 2008 mortgage meltdown that nearly destroyed the global economy. Starting around 2004, ITINs were the main vehicle aliens used to get home mortgages from banks eager to expand their loan portfolios regardless of the risk. Gone were the days of prudent lending policies that included employment and background checks. When marginally employed ITIN borrowers couldn’t make payments on their subprime, short-term balloon loans, Wall Street collapsed and worldwide credit institutions teetered on the brink of financial catastrophe.

In 2011, a Treasury Inspector General for Tax Administration investigation found that 2.9 million tax returns filed with ITINs requested $6.8 billion in refunds. Many but not all refund requests were fraudulent, most spectacularly the 23,994 refunds worth an aggregate $46 million to aliens who used the same Atlanta, Georgia, address. Then in 2012, another TIGTA report discovered “the improper assignment of ITINs to individuals who have not substantiated their identity or foreign status.” Only one-quarter of ITINs issued since the program began in 1996 have been used to file taxes.

Instead of changing the regulations to facilitate use of ITINs, as the IRS has just done, it should be abolished. Citizens and legal immigrants have Social Security numbers and have no need for ITINs. By authorizing the ITIN, the IRS knowingly aids and abets illegal immigration, a felony under Section 8 USC 1324(a) punishable by a fine and/or imprisonment.

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