Report: Tax Loophole Pays Out Billions in Tax Credits to Illegal Aliens
- Posted on May 3, 2012 at 3:46pm by
Becket Adams
- Print »
- Email »
Billions of dollars in tax credits are being paid out to illegal immigrants because of a certain “undocumented worker” tax loophole, Indiana’s WTHR-TV reports.
And, of course, it’s all happening at the expense of the taxpayer.
“There is not a doubt in my mind there’s huge fraud taking place here,” a whistleblower told Eyewitness News on condition of anonymity, “We’re talking about a multi-billion dollar fraud scheme here that’s taking place and no one is talking about it.”
So how does the alleged fraud work? It’s a little convoluted but reporter Bob Segall walks you through the process:
The Internal Revenue Service says everyone who is employed in the United States – even those who are working here illegally – must report income and pay taxes. Of course, undocumented workers are not supposed to have a social security number. So for them to pay taxes, the IRS created what’s called an ITIN, an individual taxpayer identification number. A 9-digit ITIN number issued by the IRS provides both resident and nonresident aliens with a unique identification number that allows them to file tax returns.
[...]
Each spring, at tax preparation offices all across the nation, many illegal immigrants are now eagerly filing tax returns to take advantage of a tax loophole, using their ITIN numbers to get huge refunds from the IRS.The loophole is called the Additional Child Tax Credit. It’s a fully-refundable credit of up to $1000 per child, and it’s meant to help working families who have children living at home.
And this is where the scheme kicks in: many illegal immigrant use the tax credit to claim children living in Mexico as dependents.
“We’ve seen sometimes 10 or 12 dependents, most times nieces and nephews, on these tax forms,” the whistleblower told Eyewitness News. “The more you put on there, the more you get back.”
Watch the wthr.com report:
According to Eyewitness, the whistleblower was able to provide proof of the scheme. For instance, he produced a return that shows a $10,3000 refund paid out to an “undocumented worker” who claimed nine nieces and nephews. Another return showed an $11,000 refund made to another “undocumented worker” who claimed seven nieces and nephews.
“I can bring out stacks and stacks. It‘s just so easy it’s ridiculous,” the anonymous source said.
“The magnitude of the problem has grown exponentially,” Russell George, the United States Department of Treasury’s Inspector General for Tax Administration (TIGTA) said.
A report released by George’s office shows the problem costs taxpayers more than $4.2 billion each year.
“Keep in mind, we’re talking $4 billion per year,” George said. “It’s very troubling.”
Apparently, the IRS has known about the scheme for years and it has done nothing about it despite repeated warnings from the inspector general’s office.
“Millions of people are seeking this tax credit who, we believe, are not entitled to it,” said the inspector general. “We have made recommendations to [IRS] as to how they could address this, and they have not taken sufficient action in our view to solve the problem.”
This is what the IRS had to say for itself in an official statement sent to WTHR:
The law has been clear for over a decade that eligibility for these credits does not depend on work authorization status or the type of taxpayer identification number used. Any suggestion that the IRS shouldn’t be paying out these credits under current law to ITIN holders is simply incorrect. The IRS administers the law impartially and applies it as it is written. If the law were changed, the IRS would change its programs accordingly.
The IRS disagrees with TIGTA’s recommendation on requiring additional documentation to verify child credit claims. As TIGTA acknowledges in this report, the IRS does not currently have the legal authority to verify and disallow the Child Tax Credit and the Additional Child Tax Credit during return processing simply because of the lack of documentation.
The IRS has procedures in place specifically for the evaluation of questionable credit claims early in the processing stream and prior to issuance of a refund. The IRS continues to work to refine and improve our processes.
(H/T: Washington Free Beacon)




















Submitting your tip... please wait!
Comments (161)
skiz
Posted on May 3, 2012 at 4:20pmTwo words…. FLAT TAX!
Report Post »Problem solved, problem staying solved, RANGERS lead the way!
FromSeaToSea
Posted on May 3, 2012 at 4:33pmA flat tax will not solve the coming bankruptcy until a corrupt terrorist gov. is beheaded.
Report Post »soybomb315
Posted on May 3, 2012 at 4:41pmmitt romney will not solve the problem either…since he is against the flat tax
if republicans had any guts, they would demand a flat tax before passing any further continuing resolutions or budgets
Report Post »marhee9
Posted on May 3, 2012 at 4:52pmI agree, the flat tax solves many problems. The real problem with this whole thing is the way that the left demonizes us for even talking about the issue. Conservatives are not against immigration, it’s the “illegal” part of the equation. But just like everything else, they spin it and demonize anyone who discusses the problem. Look at the hypocrisy of the President. Here it is plain as day.
Report Post »http://www.youtube.com/watch?v=pVXFGTUNDjE
13th Imam
Posted on May 3, 2012 at 4:56pmJohn Boehner DEMANDS a Flat Tax
Harry Reid laughs at him
Barry laughs at him.
Report Post »soybomb315
Posted on May 3, 2012 at 5:00pmrepublicans control the house, therefore they control the spending. dont buy into the republican excuses, they could shut this thing down if they wanted to
Report Post »turkey13
Posted on May 3, 2012 at 5:03pmMy sons have a friend of the Latino lady that babysits for them that only works for cash – $7.00 an HR. He’s been using this for years. He has a 2 Yr old Ford Kings Ranch pickup that is paid for. He will tell friends like my sons that $7.00 an hr is like making $21.00 an hr and then paying Fed. and state income tax and SS. When he’s ready to retire he will move back to Mexico. In Mexico they use a barter system but $2.00 is as good as $10.00. Aibn’t it great to be an American.
Report Post »pscully17
Posted on May 3, 2012 at 5:04pmTwo words E Veify!!! make businesses comply with immigration laws, and stop hiring illegal immigrants!!! there problem solved!! secondly.. the Legititmate taxpayers, should stop paying taxes immediately and FORCE the Congress to rip up the current tax collection code and install a NO Loophole and NO avoidance tax system. No deductions. yoy make 50 000, you pay 15 percent, you make 1 million or 1 billion… you pay 15 percent… no loopholes… the tax code book should be no more than 10 pages!! simplify and verify!!
Report Post »OuttheSocialist
Posted on May 3, 2012 at 5:36pmThe reason not many politicians are onboard with the flat tax is that there would be too many accountants and IRS agents lookin for new jobs.
Report Post »kaydeebeau
Posted on May 3, 2012 at 5:42pm@ soy…who controls the other 1/2 of the Congress (that would be the senate in case you were stumped)? Just to help you out more – Democrats control the Senate.
How many bills have been passed by the Republicans in the House and killed in the Senate? I’ll help your lazy butt out some more approx 99% of them
So what is your point? That no matter what the House does to try to help this situation the Democrats as usual stand in the way?
Report Post »smokey888x2
Posted on May 3, 2012 at 5:47pmNo, only a FAT AX can solve this problem — these Washington D.C. terrorist are just taking advantage of us.
Report Post »soybomb315
Posted on May 3, 2012 at 6:04pm@kay
i love when people like you make ignorant comments and pretend like you are making some great point. like i said, republicans control the house and therefore control the spending.
republicans can FORCE the democrats to make changes by refusing to pass any further spending bills. i dont care if democrats in the senate won’t pass something – that has nothing to do with it (although that only helps my point). This socialist government needs spending in order to achieve their redistribution of wealth and the republicans can stop it….if they wanted to.
Report Post »Jackers
Posted on May 3, 2012 at 7:15pmThe overwhelming majority of the American people have clearly expressed over and over again their absolute opposition to amnesty of any sort and demands for a secure southern border, especially during this so-called “War on Terror,” are getting stronger by the day.
Most Americans realize that mass illegal immigration is great for both of our political parties – cheap votes for the Democrats and cheap labor for the corporations who will vote Republican – but where does this leave us?
This multi-billion tax-dollar scandal is just one of the many disastrous consequences of wide-open borders and rampant illegal immigration, and the American people are tired of subsidizing cheap labor for the benefit of corporations/Republicans and cheap votes for Democrats.
A nation without borders is not a nation at all; and We the People work hard, pay for, and deserve to have a government with true “public servants” who will honor their oaths to the Constitution and serve the majority will and best interests of the American people.
Report Post »kaydeebeau
Posted on May 3, 2012 at 7:39pmSoy so how does this work in your world? The house can pass any number of measures, last I checked it still required the Senate to also act and then if the Senate should act the President has to sign it to go into law.
It has to get passed in the Senate. So how exactly is this supposed to work? How does the House force anything?
Since you you are so brilliant. explain it..type slow maybe I’ll get it
Report Post »soybomb315
Posted on May 3, 2012 at 7:51pm@kay
here is the magic secret, well it isnt a secret – magic common sense…..
THE HOUSE MUST PASS A BUDGET OR CONTINUING RESOLUTION IN ORDER TO FUND THE ACTIVITIES OF THE GOVERNMENT. you know how important it is for obama to get his money in order to advance his agenda. This is all about NOT PASSING a law rather than trying to get something through the senate. Make the democrats squirm and concede before passing another spending bill
Report Post »soybomb315
Posted on May 3, 2012 at 8:14pmgeez – its like pulling teeth around here….now i know why the republicans never even try to make government smaller
Report Post »The-Monk
Posted on May 3, 2012 at 8:55pm@skiz
Love your half face Billy Jack Icon. I remember….
Report Post »BSdetector
Posted on May 4, 2012 at 7:12amCongress, the IRS, the DOJ, every one of the traitors running of these organizations needs to be HUNG FOR TREASON against the taxpayers of this country.
Report Post »It’s not just obama, he couldn‘t get away with anything if the rest of the gov wasn’t so corrupt and complicit with the Marxist agenda put forth in the media.
Obama Been Lauding
Posted on May 4, 2012 at 10:03amObama said it best– Put a moat along the border, with alligators. Finish the border barrier, stop allowing “ILLEGAL IMMIGRANTS” from going to our public schools, no food stamps, no welfare, no tax credits, no jobs, etc. Get them out of “OUR COUNTRY” now!!!
Report Post »This is one of the biggest problems in the U.S.A., allowing this crap to continue!!!!!
I don’t care who is in charge, it needs to be taken care of. We have enough freeloaders, that are citizens.
Anyone but Obama 2012!!!!
Shiroi Raion
Posted on May 5, 2012 at 7:40amSecure the border, illegals caught get sent back, and people aren‘t citizens simply because they’re born on American soil… Someone should have the SCOTUS define the Citizenship Clause. Every honest person knows that it was meant to ensure that the freed slaves were to be considered American citizens and were supposed to have equal rights as citizens. It was not meant for the children of aliens. Is there any other country that takes alien children simply because they were born on their soil?
Report Post »These people are thieves and it’s long past time this nonsense was stopped.
AnOregonian
Posted on May 6, 2012 at 12:00pmhttp://www.youtube.com/watch?v=ZLCAnA_FM4s
Report Post »Shasta
Posted on May 3, 2012 at 4:19pmThe 51% of Americans that are feeding this monster of a government are sure being taken for a ride. Is it time to take our country back? I think so.
Report Post »FromSeaToSea
Posted on May 3, 2012 at 4:19pmNot sure why US people get birth certificates and SS#’s for their free children. Enslavement starts with the BC and the SS#. Just refuse. It time to refuse enslaving methods. It’s time for unconventional methods. You were born free. SS#’s are the beginning of slavery.
Report Post »Your original BC is not even Yours to own. It’s is the gov. who owns your original BC and acts as your trustee. This is pure slavery. Do your son and daughter a favor and refuse the BC when they are born. Insist on a birth at home and avoid the system.
hidden_lion
Posted on May 3, 2012 at 5:48pmHeck, you do not even need the birth certificate to become president…
Report Post »hatchetjob
Posted on May 3, 2012 at 6:29pmHIDDEN LION, ain’t that the truth!!!!
Report Post »MAMMY_NUNN
Posted on May 4, 2012 at 2:00amJust for the heck of it call your SS office and see if anyone is claiming on your SS you might be surprised.
Report Post »docgreen
Posted on May 3, 2012 at 4:16pmLets see their Illegal from other countries, they’re abusing our wellfare system; so we the American people not only pay for them to use Wellfare. But now we find out that we also give them tax dollars when they’re here illegally? OMG, how F_up is this country? And yet the IRS goes after people oweing $72.00 and the IRS saying it took 30 years to find you? WTF, is wrong with this country besides everything? We need to kick out everyone, including others fromother countries when we find out they’re he illegally! If you overstayed in these same countries that were acceptiong illegals from you would be hunted down by their Govts. and made to leave. Without so much as question, its time we do the same thing!….. Put them on a BUS and kick they’re A_ses out of the Country, or if they stay we take all they’re money “taxes, bonuses, anything” until they poay back everything they’ve taken from us! I know its harsh, but I’m tired if the double standards and the lies, and loopholes!……
Report Post »hatchetjob
Posted on May 3, 2012 at 6:42pmDOC, It’s not harsh at all. I wake up everyday with dread because of this nightmare of a government.
Report Post »MAMMY_NUNN
Posted on May 3, 2012 at 7:52pmPaper and money trail who exposed and promoted the loophole i’m sure it was a Dem.
Report Post »BuG
Posted on May 3, 2012 at 8:05pmA Bus….. Put them on a catapult and fire them back over the border !!!! see if they come back then.
Report Post »makeemstop
Posted on May 3, 2012 at 4:16pmAttention… ATTENTION… Lawmakers… Are any of you getting this? Do you care? Whether the IRS is reading the law correctly or not – is irrelevant.
Change the damn law to make it more -blank- clear: Its ILLEGAL for the United States Government or a related Agency to pay money, pay compensation or provide tax credit in any form to a non-US citizen and/or a person whom is in the US illegally and/or is an alien”.
Report Post »commonsenseguy
Posted on May 3, 2012 at 4:21pmtake a breath, you are getting all worked up over nothing,the government knows what is best for us,we need to just live our lives and let good ole uncle sam take care of the little things. { say this sarcastically } to bad none of the politicians have the guts to take a stand,they only care about screwing the real tax paying Americans.
Report Post »Plan B
Posted on May 3, 2012 at 6:23pmYou are exactly right. Unfortunately, most of the people who are reading your post will just anonymously post on this blog, and will not take 2 minutes to email there congressman.
Report Post »loveliberty83
Posted on May 3, 2012 at 4:16pmall my family menbers have to have an SS number in order to claim on IRS
Report Post »louie louie
Posted on May 3, 2012 at 7:36pmI, too, thought you had to provide a SS# for each dependent you claimed on your tax form. Apparently, an ITIN number works just as well. This problem could be easily solved by only allowing an ITIN number to be used for PAYING taxes but not for getting tax credits. We shouldn’t be giving tax credits to non-citizens, especially if they or their dependents are living outside the country.
Report Post »MAMMY_NUNN
Posted on May 3, 2012 at 8:06pmDo you know if there are any dependents claiming on your SS ?
Report Post »The SS wont tell you unless you call and check.
Say if i’m on SS and someone claims they have my illigitimate child they can claim SS benefits and I would never know.
tltmssc95
Posted on May 3, 2012 at 4:15pmTax fraud is not limited to aliens. Millions of citizens file fraudulent tax returns each year claiming to to be self-employed. They then qualify for the “earned income tax credit” which is high enough to cover the Social Security tax owed on the fake self-employment earnings and still get a hefty refund on taxes they never paid. So they wind up with a hefty refund and get Social Security credits for retirement purposes without a dime coming out of their own pocket. Lots of these folks are already on the dole on programs like Supplemental Security Income.
Report Post »FromSeaToSea
Posted on May 3, 2012 at 4:14pmBankruptcy is coming folks. The US is going bankrupt by the military war machine and corruption. It has nothing to do with Obama’s “everyone needs to pay their fair share.” What’s the gov. care about going bankrupt? It’s just digital electronic currency backed by You.
Report Post »Vote Ron Paul and end the Federal Reserve. Get a balanced budget with accountability.
Ron Paul won Louisiana last week. The media is lying about His numbers.
He is the only candidate that will preserve the purchasing power of Your savings and earnings.
Wake Up or go broke.
Joe Schmuck
Posted on May 3, 2012 at 5:11pmRon Paul is the only one left who is NOT on the side of big government.
Romney has been shoved down our throats by the corrupt liberal media, INCLUDING FOX and the political machine. BOTH Parties!!
I’m not a Ron Paul supporter, but my candidates have been chewed up and spit out, lied about and/or ignored.
One thing for sure, our government has not been looking out for the people for a very long time. At least 60 years that I can remember. They have been taking from us, from our children and grandchildren for too long.
I was hoping for something from the T-Party movement and that I could see this country make a come-back in my lifetime. Now I don’t see that happening. We have a government that is ‘Above the Law’ and just shoves that in our face.
Prayer …. there’s always hope in prayer.
Blessing folks
Report Post »G-WHIZ
Posted on May 4, 2012 at 1:13pmEndight the fed-chairman…repl with Ron Paul….get popcorn…sit back…and watch the fun.
Report Post »loveliberty83
Posted on May 3, 2012 at 4:13pmhow can they give theses refunds-they require all Americans to have a ss # for each child on their forms in order to claim any child so How can illegals claim kids without proof I also read where prisoners are also claiming kids & getting refunds This is discrimination against American citizens-can we call it racist lol
Report Post »olderjarhead
Posted on May 3, 2012 at 4:13pmAre we to the point yet, where we can just buy all the 99%ers, and illegals a new car, and a new house in the burbs?
Report Post »hatchetjob
Posted on May 3, 2012 at 6:45pmI can‘t believe this crappy system hasn’t collapsed already from all the leeches.
Report Post »DirtyWhiteBoy8
Posted on May 4, 2012 at 12:18pmI have a plan , Why don’t the government buy all the “poor” people a Chevy Volt ? Then pay their electric bill so they could all ride for free . Its a win win ! They win , Chevy wins ! Hell we pay for everything else .
Report Post »RamonPreston
Posted on May 4, 2012 at 1:25pmI have paid hundreds of dollars out of my pocket this year and our government hasn’t put in one cent. Maybe I should go to Mexico and sneak back in.
Report Post »commonsenseguy
Posted on May 3, 2012 at 4:12pmwell,they better enjoy their free { illegal } money while they can because when the “‘ new world order “‘ { communist }government takes over,even the illegal will be legal and will lose all of their tax wright offs just like everyone else, i wonder who they are paying an extortion fee to,some one has to guide them to the right place and help them to fill out the paper that will let them commit fraud.
Report Post »RamonPreston
Posted on May 4, 2012 at 1:20pmGlad to hear someone besides me is preaching the NWO.
Report Post »I.Gaspar
Posted on May 3, 2012 at 4:12pmObama is guaranteeing he gets their votes when they vote under different names sans ID…
Report Post »Steve28
Posted on May 3, 2012 at 4:10pmSo we have to have a SS# for each child and they do not have to have proof. What genius made these rules?
Report Post »hatchetjob
Posted on May 3, 2012 at 6:49pmProbably Pelosi and Reid.
Report Post »walkintruth
Posted on May 3, 2012 at 4:09pmWarren Buffet thinks it will help to have the 1% pay more. Well, how about these illegals stop taking our tax dollars. There is so much waste and fraud causing our taxes to be higher. We don’t need to raise our taxes, just stop handing it out to people that don’t live here or belong here.
These people that claimed so many kids lived there, should go to jail. The IRS does know about this. They need to be stopped.
Meanwhile, if one of us are late with our taxes we get fined. We need to fire these people at the IRS now. Congress needs to get on top of this now.
Report Post »Detroit paperboy
Posted on May 3, 2012 at 4:09pmIf your plan is to break the back of the American taxpayer and the nation, why would you care ???
Report Post »hatchetjob
Posted on May 3, 2012 at 6:51pmYes, it looks like Oblamo is succeeding.
Report Post »leasecommander
Posted on May 3, 2012 at 4:08pmAgain, can anyone honestly that our government is not too large???
Report Post »This is just sickening !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Tickdog
Posted on May 3, 2012 at 4:06pmim telling you.. war with mexico..
Report Post »blanco5
Posted on May 3, 2012 at 4:11pmTHAT would make them show their loyalty for sure!
Report Post »soybomb315
Posted on May 3, 2012 at 5:24pmsure why not
Report Post »Mark0331
Posted on May 3, 2012 at 4:05pmAll illegal immigrants know this ‘trick’…and yet they still cry about being treated ‘unfairly’….I care not one bit for their ‘plight’….deport every last one of them, regardless of country of origin. I break the law, I am punished…this is wholesale extortion in the guise of ‘the humanitarian condition’ BS the left spews.
Report Post »commonsenseguy
Posted on May 3, 2012 at 4:18pmyeah,we Americans break the law and all hell brakes lose,and some times we don’t even know what laws we are breaking, i am with you send everyone of back and let them come here the right way, o yeah,according to the left wing nut jobs,no one is here illegally, just real hard working Americans are illegal,because we would like less government.less taxes,less regulations and left alone,
Report Post »MAMMY_NUNN
Posted on May 4, 2012 at 1:33amIn the next election Mexico may well be among the voting.
Report Post »Gonzo
Posted on May 3, 2012 at 4:02pmWait a second, I thought it was the rich who don’t pay their fare share? Has Obama been lying again?
Report Post »commonsenseguy
Posted on May 3, 2012 at 4:09pmevery time he opens his pie hole.
Report Post »CatB
Posted on May 3, 2012 at 4:49pmLOL …. GONZO … were his lips moving? !!!
TEA Party people TEA Party!
Report Post »Welcome Black Carter
Posted on May 3, 2012 at 7:49pmOwe-Bamma, the most dangerous man in America.
Report Post »bikerr
Posted on May 3, 2012 at 4:01pmWell allrighty now. Let’s see how this story will be ignored by the powers that be.
Report Post »campt1
Posted on May 3, 2012 at 4:00pmReally, what is wrong with the American people?
Report Post »Welcome Black Carter
Posted on May 3, 2012 at 7:47pmLiberalism.
Report Post »jcvillar
Posted on May 3, 2012 at 3:59pmSlight problem here. How do you place a dollar value (“billions”) on a covert activity? Did all these tax cheats just pop out of the woodwork and confess to the detailed dollar values so someone could add them up? Don’t think so.
Report Post »MittensKittens
Posted on May 3, 2012 at 3:58pmYeah, one more thing that makes me want to puke.
Report Post »Snowleopard {gallery of cat folks}
Posted on May 3, 2012 at 3:54pmInteresting is it not, a regular person commits such a crime and its fraud – a poltitician or their base among the illegal aliens are able to use and exploit the system w/o worry of prosecution. The law is suppose to apply equally across the board; for the illegals you are breaking our laws already, this ‘loophole’ needs to be closed completely.
Report Post »Plan B
Posted on May 3, 2012 at 6:30pmIt seems to me that if you have enough tax credits/deductions etc. to get your tax to 0, that should be good enough. No Earned income credits that give you taxpayer cash (OBAMA MONEY) Earned income credit was supposed to just offset a raise in social security taxes. At some point, hopefully soon we will have the house, senate and presidency and then we have to get the flat tax quickly-just like they gave us obamacare.
Report Post »johnjamison
Posted on May 3, 2012 at 3:53pmSo they are now bragging about commiting felonies against the u.s.tax payers
Report Post »Popp40
Posted on May 3, 2012 at 4:05pmYes they are, just look at the picture of those holding the sign….they are breaking a Federal law yet they know nothing will be done to them……once again…isn’t it nice to be an illegal….you get all the perks and don’t have to pay in or follow any of the laws of this nation.
Report Post »HKS
Posted on May 3, 2012 at 4:09pmDon’t hold your breath, some sort of punishment is not in order, it’s part of the redistribution plan. It didn’t get there by accident.
Report Post »FromSeaToSea
Posted on May 3, 2012 at 4:30pmThe biggest felonies are being perpetrated by executive order from the Washington terrrorist gang.
Report Post »We have a known terrorist in the WH. We have known terrorist heading federal agencies and as czars. The good citizens of the US are being raped of their Country.
The American Revolution was fought over a 14% tax. Most of us are paying 50%+ tax when you add in all the indirect taxes. When is enough enough?