IRS pays immigrants billions for real or imagined kids overseas

WASHINGTON – Children living overseas. Thousands of tax filers from the same addresses – many with no taxes owing, and of unknown legal status.

They’re all in line for refunds from the Internal Revenue Service.

Watchdog reported last month that while paying out $70 million in staff bonuses and targeting conservative groups for audits, the IRS has issued billions of dollars in refund checks to illegal immigrants (aka “unauthorized workers”) under the most suspicious circumstances.

The biggest moneymaker is the Additional Child Tax Credit, ushered in as part of President Obama‘s stimulus package, and still going. At $1,000 per dependent, undocumented immigrants got checks totaling $4.2 billion in 2010, according to a government audit. The children didn’t even have to live in the U.S.

Mexican childrenNearly three-quarters of the recipients – who received refunds irrespective of any taxes owed – filed their claims using an Individual Taxpayer Identification Number.

ITINs are typically held by persons who do not qualify for a Social Security number. The government won’t say how many ITIN holders are in this country illegally. But, as they say in Vegas, take the “over.”

The Treasury Inspector General for Tax Administration has conducted numerous audits, and repeatedly called on the IRS to get a grip on the numbers game.

“The number of individual income tax returns filed using ITINs and reporting wage income has increased by 247 percent from 2001 to 2008,” said J. Russell George, Treasury’s inspector general. “If the IRS continues to issue ITINs without proper verification, the risk of fraudulently filed returns – along with fraudulently claimed refunds – will continue to rise.”

The IRS has responded by writing more checks.

Oh, and the agency blamed the Social Security Administration, which it says is responsible for policing improper use of ITINs – though they are issued by the IRS.

Congress has been no help. Although the Republican-controlled House has voted twice to require that tax filers claiming the child tax credit have valid Social Security numbers, the Democrat-controlled Senate said no.

Last week, the Senate passed immigration-reform legislation (S.744) that would pave a path to citizenship for undocumented people already gaming the system.

Whether the bill lives or dies in the House, the IRS and, more broadly, U.S. taxpayers still have a problem in the form of 15 million-plus ITINs floating around out there.

In just one case, an Indianapolis television station found that four illegal aliens sharing a small trailer received a $29,608 IRS refund by claiming tax credits for 20 nieces and nephews who live in Mexico.

Treasury audits have exposed thousands of other examples where groups of ITIN-holding immigrants use children – real or imagined — to grab refund checks.

“I am assuming that the children in Mexico are what the IRS calls ‘alien individuals’ eligible to be claimed as a dependent on a U.S. tax return, but who is not eligible to obtain a Social Security number,” says Kyle Pomerleau of the Tax Foundation.

“Is there a legitimate reason for explicitly allowing immigrants to claim their children back home when the children never lived with them? No, not really,” he answers.

While some see a pattern of criminal racketeering, Pomerleau concludes that from a tax policy standpoint, the looting of the Treasury goes beyond lowly migrants. It is legally aided and abetted by bureaucrats and elected representatives sitting at the highest levels of our government.

“A certain amount of fraud by all people — immigrants or natives — is expected as the tax code becomes more complex,” he says.

Published with permission from

Kenric Ward is a national reporter for and chief of the Virginia Bureau. Contact him at [email protected]


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