An Indianapolis television station ran a two-part series on corruption in the IRS in October, and if you missed it, here are some facts uncovered along with other sources.
- The IRS accepts millions of tax returns — and issues tax refunds — even when taxpayer documents show clear warning signs of identity theft.
- Confidential IRS policies instruct IRS employees not to tell taxpayers when someone else uses their Social Security number to earn income.
- The IRS allows illegal immigrants to “borrow” Social Security numbers that do not legally belong to them.
- The IRS is discontinuing a program to notify taxpayers when their Social Security number is used by someone else to gain employment.
Everyone who meets minimum income thresholds in the United States is required to file a tax return with the IRS. Undocumented workers are required to submit a tax return despite their illegal immigration status using an ITIN, individual taxpayer identification number issued by the government. The ITIN cannot be used to get a job, and as a result most companies require a Social Security number also.
At tax time, millions of undocumented workers send the IRS their ITIN tax return and along with it, many send a W-2 that shows the income they earned using somebody else’s Social Security number. The ITIN and Social Security number clearly don’t match, sending a huge warning sign of identity theft. The IRS has an official name for that — an ITIN/SSN mismatch — but it accepts millions of these tax returns, encouraging undocumented immigrants to file in this manner.
The Treasury Inspector General for Tax Administration (TIGTA) reported in 2000 that undocumented workers submitted 309,000 ITIN/SSN mismatches. In 2007 that number rose to 1.2 million. Eighty percent of ITIN tax returns used someone else’s Social Security number. The current figure is more than 3 million, with 91 percent using mismatched numbers.
Government agencies have no plan or strategy to stop this. The IRS will tell you that it is taking steps to correct this, but it is targeting the criminal who files a tax return with someone else’s Social Security number for the purpose of stealing that person’s tax refund.
In addition, an estimated 12 million illegal immigrants currently living in the United States claim huge tax credits for children who live in other countries, and the IRS has been turning a blind eye to this practice for more than a decade.
The loophole is called the Additional Child Tax Credit. It’s a fully refundable credit of up to $1,000 per child, and it’s meant to help working families who have children living at home. One of these undocumented workers was interviewed at his home in southern Indiana and admitted his address was used this year to file tax returns by four other undocumented workers who don’t even live there. Those four workers claimed 20 children live inside the one residence; as a result, the IRS sent the illegal immigrants (who all live in Mexico) tax refunds totaling $29,608.00.
“The magnitude of the problem has grown exponentially,” said Russell George, the U.S. Department of Treasury’s inspector general for tax administration (TIGTA).
George has repeatedly warned the IRS that undocumented workers are abusing the additional child tax credits. In 2009, his office released an audit report that showed ITIN tax filers received about $1 billion in additional child tax credits. Last year, the inspector general released a new report showing the problem now costs American tax payers more than $4.2 billion in one year.
Undocumented workers filed 3.02 million tax returns in 2010. Seventy-two percent of those returns (2.18 million) claimed the additional child tax credit.
In 2010, the IRS owed undocumented workers more in claimed additional child tax credits than it collected from those workers in taxes.
Rep. Sam Johnson, R-Texas, introduced legislation in May to curb the abuses. “We can fix this by simply requiring a Social Security number.” He would eliminate child tax credits for all individuals who have ITIN numbers.
Eligible recipients would be required to provide a Social Security number — something millions of illegal immigrants do not have. Illegal immigrants, when told of this proposed bill, responded that they would be hit hard and would stand to lose thousands of dollars in tax credits for their children — children who were born in the United States and who are U.S. citizens.
On Oct. 27, IRS Commissioner John Koskinen admitted to the Senate Finance Committee that the IRS is aware of the problem, but he said he did not want to discourage undocumented workers from filing taxes.
Both Sens. Dan Coats and Joe Donnelly say they will continue to monitor the actions of the IRS. Time is at hand to clear up this injustice. Enough talking.
Martha Vail of Charlottesville is a member of the Hancock County Tea Party. She can be reached at email@example.com.