Illegal Immigrant Tax Scam Costs Americans $4 Billion Annually

By Joe Guzzardi
May 11, 2012

Just weeks after Americans filed their income tax returns, an Indiana accountant blew the whistle on an egregious abuse of the child tax credit perpetrated by illegal aliens.

The fraud’s bottom line cost: $4.2 billion annually. According to the accountant turned whistleblower, illegal aliens are filing false returns, claiming in addition to their own children, neighbors, nieces and nephews. In some cases, even though the children may not live in the United States, filers receive an additional $1,000 per child tax credit. Said the accountant, “It’s so easy it’s ridiculous.”

During interviews broadcast by Indianapolis station WTHR, aliens voluntarily revealed the scam’s extent. One filing address used by as many as four heads of families claimed 20 children as dependents when, in fact, only one child lived in the home. Some “dependents” reside in Mexico.

Refunds to the illegal immigrants ranged as high as moderate five figures. Despite their brazen actions, the illegal immigrants conveyed no sense of wrong doing. Whether their lack of remorse indicates no understanding that hard working Americans fund their windfalls or their engrained sense of entitlement wasn’t clear.

Sad to say, this nationwide deceit has been well known to and therefore tacitly endorsed by Congress for decades. As the whistleblower put it, “The IRS has to know.”

What makes the exploitation possible is the Individual Taxpayer Identification Number also called the ITIN. Established 15 years ago, the ITIN is a seemingly innocuous administrative number that the Internal Revenue Service assigns to anyone who is employed and pays taxes regardless of immigration status.

Since the IRS isn’t required to share its information with any other federal agency including immigration authorities, the promise of intra-agency confidentiality allows aliens to file tax returns without fear of deportation. At the same time, holding an ITIN also enables aliens to authenticate their presence in the United States to prove that they’ve paid taxes. This information could be crucial if Congress ever enacted an amnesty.

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. Pursuant to an IG report, 72 percent of tax returns filed by ITIN users claimed the ATCT credit compared to just 14 percent of returns filed with social security numbers.

Although George correctly points out that ITIN misuse has grown exponentially under the Bush and Obama administrations, no one listens to him. George insists the credit was “never intended” for aliens. And when the WTHR reporter flew to Washington, he found that “none of the IRS’s 100,000 employees” would talk to him.

The WTHR exposé immediately went Internet viral. Properly outraged Americans called their Congressional representatives who introduced four bills aimed at ending the taxpayer swindle. If their legislation passes, filers would have to enter a valid social security number on their returns to qualify for an ATCT refund credit. With a $15 trillion federal deficit, ending a $4 billion alien entitlement should be—but isn’t—a no-brainer.

To allow aliens to collect billions in taxpayer credits they don’t deserve sends the message that the federal government wants to not only make it easy for illegal immigrants to come to the United States but to also ensure that it’s lucrative for them once they get here.

Joe Guzzardi is a Californians for Population Stabilization Senior Writing Fellow. His columns have been syndicated since 1986. Contact him at [email protected].