NTF Issue Paper: illegal72.doc. 6-17.

One of the many ways in which illegal aliens sting American taxpayers is through receipt of tax credits. They receive several federal credits by engaging in various criminal activities like stealing Social Security numbers or lying on federal forms but also because of lax federal law and regulation enforcement under the Obama Regime that encouraged illegal immigration.

President Trump is strictly enforcing the rules against illegal aliens receiving Social Security benefits. Information on illegals now held by the Social Security Administration (SSA) will share with other agencies. When the IRS mails income tax rebate checks to a group of employees, it can routinely run the name/number pairs through the E-Verify system and then issue checks only to those pairs that match. Those whose information does not match can respond with revised info within 90 days. If not using this alternative, their names will enter a master list of aliens who lied about their SSNs, a crime. A list containing their names will become available to all law enforcement agencies. Those on a non-match list will no longer receive federal benefits, names available to state and local governments and investigative and prosecution agencies. Because most illegals working here use their names with fictitious or stolen SSNs, this proposal will identify many illegals subject to deportation. Such actions will offer incentives for illegals to self-deport. The SSA never has taken responsibility to treat SSNs by this method, but Trump insists. In his budget request to Congress, Trump wants to ensure that only people legally working in the U.S. receive tax credits, a measure that he believes necessary to respect taxpayers and balance the budget. Stricter eligibility standards for the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) will save $40 billion over 10 years. Att.-Gen. Sessions agreed that ending improper tax credits to illegal immigrants, mostly from Mexico, would save the nation $40 billion and pay for a large part of the border wall. Already, fear of the Trump action has caused illegals to delay or not file tax paperwork to obtain wrongful refunds. They also fear coming to the attention of immigration authorities. To counter this trend, leftist groups, community organizers, and the Mexican Consulate are colluding to help illegals maneuver to obtain tax refunds, with workshops in liberal churches and at community sites.

One must hold an SSN to qualify for a federal public benefit. Green card holders, refugees, and individuals granted asylum receive SSNs. Federal law forbids illegal immigrants from earning income in the U.S., but many of them do so by working for cash and by fraudulently using SSNs. However, illegal immigrants are eligible to claim up to 8 refundable tax credits under federal law, according to the Congressional Research Service. Most wrongful payments of federal funds to illegals come during the income tax filing season. Illegals often file their forms early to get refunds and other payments as soon as possible. A 2017 report from the Treasury Inspector-Gen. for Tax Administration revealed that the feds mistakenly paid $15.6 billion through the EITC in FY 2015.1 These wrongful payments totaled 23.8% of the total tax money distributed through the EITC. The Office of Management & Budget classified the EITC program high-risk, the only IRS program with such designation. The Joint Comm. on Taxation calculated that illegal aliens approved for the Obama amnesty would file 800,000 EITC claims over the next decade. The EITC is a tax credit for low income tax filers but requires an SSN to claim it. If the credit is larger than the tax liability, the difference goes directly to the filer. Once eligible for the EITC, tax law permits anyone, including illegals, to amend a tax return from the last 3 years to claim credits. Obama Regime immigration policies contributed much to increased fraudulent payments, because executive amnesty orders, including for Deferred Action for Childhood Arrivals, reward illegals with an SSN. The Congressional Research Service confirmed that every amnestied illegal alien is eligible for more than $24,000 in tax credits. The Inspector-Gen. report also mentioned other refunded tax credits that result in wrongful payments. The ACTC is a refundable credit that permits those with 3 or more kids to reduce their federal income tax by up to $1,000 for every kid. This program means to cover poorer families. Access to the ACTC further expanded with the passage of the 2009 stimulus plan. Under current law, taxpayers do not need SSNs to claim this credit on their returns, though they can only claim dependents who are U.S. citizens or lawful alien residents. Improper payments under this program totaled 24.2% in FY 2015, or $5.7 billion.2 Like the EITC, most of these fraudulent payments went to illegal aliens. An outrageous example: 4 illegals sharing a trailer in Indianapolis received $29,608 from the IRS by claiming tax credits for 20 nieces and nephews in Mexico. None of the 20 children named in ACTCs claimed had visited the U.S. or acquired U.S. citizenship or resident alien status. Many ACTC credits issue to children who either do not exist, live in a foreign country, or are over-aged. One phony address in Atlanta received 23,994 ACTC tax refunds, including 8,393 deposited into the same bank account. About 25% of 2016 payments for both programs were wrongful, says the Treasury Inspector-Gen., or approximately $17 billion for the EITC and $7 billion for the ACTC. If you claim the ACTC of $1,000 per child, the child should have a genuine SSN issued. The average amount of the ACTC refund was $1,800, but 9,000 people grabbed $10,000 or more by filing multiple tax returns for several prior years, obtaining a combined $1 billion. The Obama 2009 stimulus measure made temporary changes that permitted more parents to claim the refundable credits or claim greater amounts. The total grew the next year to $4.2 billion. Federal government data proves that though about half of illegal immigrants file federal tax returns, the vast majority do not pay federal income taxes. Instead, they use these returns to claim refundable tax credits, a form of cash welfare. Illegal aliens use the federal income tax code to steal money from U.S. citizens. Tax advantages given illegals as residents include receiving spousal exemptions, standard deductions, and erroneous earned income credits. Illegals are also eligible for the American Opportunity Tax Credit, a tax credit for tuition, and the Health Coverage Tax Credit, a tax credit for insurance costs. These aliens also can receive a tax credit for tax withheld on wages, for fuel excise taxes, overpayment of taxes, and tax withheld at source for nonresident aliens and foreign corporations.

In 1996, liberal congressmen created this 9-digit number for foreigners without an SSN, including illegals, to file taxes. However, as illegal aliens cannot work legally, they would have no work taxes to file! ITINs are only another welfare program for illegals. Such aliens file ITIN tax returns and then apply for an ACTC, entitling them to $1,000 per child. ITIN filers can claim both the Child Tax Credit and the Additional Child Tax Credit. Many ITIN filers submit tax returns for multiple years and claim credits retroactively. For 5 years straight, ITIN filers have claimed more in refundable credits than paying in income taxes, causing a net outflow of IRS dollars reaching $3.13 billion in 2010. Many ITIN tax returns base on false income statements, stolen SSNs, and other forged documents. ITIN filers are more than 5 times more likely than SSN filers to claim the ACTC. The IRS Taxpayer Advocate office found that about 50% applying for ITINs in 2014 were Mexican.

Senate Homeland Security Comm. Chairman Ron Johnson (WI.) requested Treasury Sec. Mnuchin to examine by audit the IRS failure to prevent fraudulent overpayments of the ACTC to illegals. The Obama IRS commissioner has allowed a tax filer to use an Individual Taxpayer Identification Number (ITIN) instead of an SSN to claim the ACTC. The IRS requires an ITIN from workers not authorized to work here but for tax purposes only. The IRS inspector-gen. testified that the agency does not effectively ID potentially fraudulent activity and fails to adequately address the fraud. Johnson wants a requirement for SSNs to receive ACTC payments, adding that failure to do so would offer an incentive for more illegal immigration. A 2015 Sen. Grassley bill as a guide would prohibit illegals from going back to claim the EICT for previous years and for the year in which they received deportation amnesty. The SSA would share information with the IRS, so that tax agents could ascertain who was claiming tax credits illegally.

Rep. Luke Messer (Ind.) through his HR 363 would prevent taxpayers who do not have SSNs from claiming the ACTC. This bill expands the ID requirement for the child tax credit to require taxpayers to provide a valid SSN on their tax returns in addition to the name and identification number of each qualifying child. He further requested the President to bar the IRS from permitting people without valid SSNs to claim this credit. Currently, illegal immigrants can claim the credit without an SSN by using an ITIN issued to individuals regardless of their immigration status. Federal tax benefits should go to low and middle-income American families who work hard and follow the rules, not to those who break them, said Messer. His news release noted that a 2014 Treasury Inspector- General for Tax Administration report estimated that between $5.9 billion and $7.1 billion paid yearly to illegal immigrants and others illegally claiming children. An earlier 2011 report estimated that $4.2 billion went to illegal immigrants. Messer also cited a 2012 investigative report by WTHR Channel 13 in Indianapolis that found several illegals claiming the child tax credit for children who did not live in the U.S.  Congressman Sam Johnson (TX) reintroduced his Refundable Child Tax Credit Eligibility Verification Reform Act, HR 2149. The bill seeks to prevent illegal aliens from claiming the $1,000 refundable child tax credit.  To stop this credit abuse, his bill requires individuals to provide their SSNs to claim this tax credit.  The money saved by his bill could pay for the entire border wall. This common sense bill passed the House before, something hardworking, taxpaying Americans want, need, and deserve. In 2016, the House Ways & Means Comm. approved a party-line vote to require SSNs for taxpayers claiming the ACTC. Socialist Democrats all voted NO, and the issue failed in the Senate.

The Treasury Department is careless about dispensing SS cards. Documents can arrive through the mail after proving status via a passport or combination of such documents as a VISA, foreign voter ID, or school and medical records, without personal interviews. The IRS has done little to prevent the prevalence of ID theft and usually fails to notify those whose names, SSNs, or credit card numbers have suffered theft. Thus, taxpayer credit cards, bank accounts, and other accounts lie at risk. An IRS audit found IRS management was “not concerned with addressing questionable applications” but “interested only in the volume of applications that can be processed, regardless of whether they are fraudulent.” Whistleblowers contend that tax return processors receive orders to ignore cases of obvious ID theft. To receive a pay hike and positive evaluation, ITIN processing agents must file a specific number of tax returns per hour. The high number of fraudulent ACTC claims comes largely because the IRS verifies neither residency nor citizenship status of the kids for whom the refundable credits issue, despite the agency website listing both of these as needed criteria to claim the ACTC. The Joint Committee on Taxation (JCT) estimates that denying the ACTC to ITIN filers would have saved taxpayers $1 billion in 2014 and probably $7.6 billion over the next decade. Tax experts state that illegal immigrants can claim the credit without paying taxes previously. The IRS has become a welfare administrator. It made a bureaucratic decision to grant amnesty to illegal aliens for tax purposes and to decline to provide information about illegal aliens to federal immigration authorities.

Liberal congressmen oppose reform, citing the supposed negative impact on illegal alien children deprived of basics. They accuse Republicans who want to end credits of a heartless attack on children. Also, they want continued payroll and sales tax contributions of illegals, much of which funds entitlement programs for which illegals are eligible. Leading Democrats resist all reform bills that would stop future payments to illegal aliens. The radical Hispanic group La Raza cites discrimination against Hispanics.

Under Obama Care, about 4 million illegals have gotten tax credits. 500,000 illegal aliens received $750 million in health care credits by 2015. Rep. Lou Barletta (R.-Pa.) introduced the Verify First Act, HR 1671, that would require the Treasury Department to work with the Social Security Administration and DHS to verify an individual SSN before receipt of health insurance tax credits. “In order to stop illegal immigration, we need to end the practice of giving benefits to those who unlawfully enter our country.  It is an outrage that a half a million illegal immigrants received three-quarters of a billion dollars in Obama Care payments, while American workers and families were priced out of their health care plans due to Obama Care skyrocketing premiums,” Barletta said in a news release. Illegal immigrants will file 800,000 claims for EITC refunds under the Obama deportation amnesty, costing the government $2 billion over the next 5 years, congressional sources predicted as key lawmakers proposed legislation to cancel the amnesty bonus. HR 2581, also by Rep. Barletta, would require the provision of SSNs before receiving the health insurance premium tax credit. This bill prohibits advance payments of this tax credit made to an individual, unless the Treasury Dept. has received confirmation from the Department of Health and Human Services that the SSA or DHS has verified status as a citizen or an alien lawfully present in the U.S. The verification process must include reliable information related to citizenship or immigration status, such as SSNs. House Republicans have pushed through this bill that seeks to ensure people in the country illegally cannot gain tax credits to pay their health insurance premiums. It requires agencies to verify an applicant SSN, before the Treasury  Department pays the tax credit to a health insurer. The Verify First Act passed 238-184 and awaits Senate action. President Trump supports the bill, the White House saying it “stems the flow of payments to ineligible individuals under Obama Care.” Conservatives also call the bill another step in repealing and replacing Obama Care. Socialist Dem reps opposed the bill, arguing that not all individuals can obtain an SSN verifiable at application time, including some lawfully- present immigrants. The feds would spend about $400 million on Obama Care refunds in 2017, $1.1 billion in 2018, $400 million in 2018, and $100 million in 2020. As illegals approved for Obama amnesty cannot calculate refunds by themselves, leftwing groups are assisting them.

Congress will vote on a budget measure soon, and a budget reconciliation package now considered in the House contains language that would end child tax credits to those without a valid SSN. Tell your Capitol Hill delegation to reform tax credits and force the IRS to investigate tax returns and begin prosecuting fraud. Though congressmen have criticized the IRS for wrongful and fraudulent payments, neither House nor Senate leaders have sponsored remedial legislation. Permitting individuals to claim credits without providing an SSN means paying illegal immigrants to stay in the country and work without authorization. Money saved by reform could help pay down the national debt or help build a border wall.

Research, documentation, and analysis for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted by Nebraska Taxpayers for Freedom, with express prior permission granted for its use by other groups in the NE Conservative Coalition Network. 6-17 C.

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