Tax loophole abused by illegal aliens costs billions...

Tax loophole costs billions:


Millions of illegal immigrants are getting a bigger tax refund than you. Eyewitness News shows a massive tax loophole that provides billions of dollars in tax credits to undocumented workers and, in many cases, people who have never stepped foot in the United States. And you are paying for it!

[video=youtube;0gwWaKkV6RM]http://www.youtube.com/watch?v=0gwWaKkV6RM[/video]

INDIANAPOLIS - Inside his central Indiana office, a longtime tax consultant sits at his desk, shaking his head in disbelief.

"There is not a doubt in my mind there's huge fraud taking place here," he said, slowly flipping through the pages of a tax return.

The tax preparer does not want you to know his name for fear of reprisal, but he does want you to know about a nationwide problem with a huge price tag.

He came to 13 Investigates to blow the whistle.

"We're talking about a multi-billion dollar fraud scheme here that's taking place and no one is talking about it," he said.

The scheme involves illegal immigrants -- illegal immigrants who are filing tax returns.

How it works:

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.

While that may have seemed like a good idea, it's now backfiring in a big way.

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.

But 13 Investigates has found many undocumented workers are claiming the tax credit for kids who live in Mexico – lots of kids in Mexico.

"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."

The whistleblower has thousands of examples, and he brought some of them to 13 Investigates. While identifying information such as names and addresses on the tax returns was redacted, it was still clear that the tax filers had received large tax refunds after claiming additional child tax credits for many dependents.

"Here's a return right here: we've got a $10,3000 refund for nine nieces and nephews," he said, pointing to the words "niece" and "nephew" listed on the tax forms nine separate times.

"We're getting an $11,000 refund on this tax return. There's seven nieces and nephews," he said, pointing to another set of documents. "I can bring out stacks and stacks. It's just so easy it's ridiculous."

WTHR spoke to several undocumented workers who confirmed it is easy.

They all agreed to talk with WTHR investigative reporter Bob Segall and a translator as long as WTHR agreed not to reveal their identity.

One of the workers, who was interviewed at his home in southern Indiana, 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 and, as a result, the IRS sent the illegal immigrants tax refunds totaling $29,608.

13 Investigates saw only one little girl who lives at that address (a small mobile home). We wondered about the 20 kids claimed as tax deductions?

"They don't live here," said the undocumented worker. "The other kids are in their country of origin, which is Mexico."

He later explained none of the 20 children have ever visited the United States – let alone lived here.

So why should undocumented workers receive tax credits for children living in a foreign country, which is a violation of IRS tax rules?

"If the opportunity is there and they can give it to me, why not take advantage of it?" the worker said.

Other undocumented workers in Indiana told 13 Investigates the same thing. Their families are collecting tax refunds for children who do not live in this country. Several of the workers told WTHR they were told it was legal for them to claim the tax credit for a child who does not live in the United States.

IRS was repeatedly warned:

"The magnitude of the problem has grown exponentially," said Russell George, the United States Department of Treasury's Inspector General for Tax Administration (TIGTA).

And he says the IRS has known about the problem for years.

George has repeatedly warned the IRS that additional child tax credits are being abused by undocumented workers. 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.

"Keep in mind, we're talking $4 billion per year," he said. "It's very troubling."

What George finds even more troubling is the IRS has not taken action despite multiple warnings from the inspector general.

"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."

Other information obtained from the TIGTA audits include:

· Claims for additional child tax credits by ITIN filers have skyrocketed during the past decade, from $161 million in 2001 to $4.2 billion in tax year 2010.

· Undocumented workers filed 3.02 million tax returns in 2010. 72% 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.

What does the IRS have to say about all this?

The agency sent WTHR a statement, defending its policy of paying tax credits to illegal immigrants.

"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," the statement said.

George disagrees with that position and believes the IRS should be doing more to prevent undocumented workers from getting billions in US tax dollars.

"The IRS is not doing something as simple as requesting sufficient documentation from people seeking this credit," he said. "Once the money goes out the door, it's nearly impossible for the IRS to get it back."

Over the past month, WTHR has tried to ask the IRS more questions about its efforts to prevent abuse involving additional child tax credits.

Despite repeated phone calls, e-mails and a visit to IRS headquarters in Washington, the agency said none of its 100,000 employees had time to meet with 13 Investigates for an interview. An IRS spokeswoman said all staff were too busy because of the tax filing deadline in mid-April.

Apparently, the IRS doesn't have time to respond to some tax preparers, either.

Last year, our whistleblower noticed dozens of undocumented workers had used phony documents and false income to claim tax credits. He reported all of it to the IRS.

"These were fraudulent, 100% fraudulent tax returns, but I got no response; absolutely none. We never heard a thing," he said. "To me, it's clear the IRS is letting this happen."

The IRS tells WTHR it can do nothing to change the current system unless it gets permission from Congress. In other words, according to the IRS, closing the loophole would require lawmakers to pass a new law specifically excluding illegal immigrants from claiming additional child tax credits.

The big questions now: Is Congress willing to do that?

What's next:

Tomorrow night, 13 Investigates will show you how lawmakers are reacting to WTHR's investigation and what they plan to do about. You'll also hear why some undocumented workers say the credits are essential and should be left intact. Our investigation continues Friday night at 11:00.

Full statement to WTHR from the Internal Revenue Service:

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.

Source

 

What do you folks think of the thieving invaders that are stealing your tax dollars?

 

I think it's outrageous.
Illegals getting refunds fraudulently....how many jobs lost and how many billions before we take this problem seriously???

My God, people this is YOUR money these illegals are taking. Do something!!
Call your Congressman. Call your Senator.

I'll be calling mine TODAY.

We've got to cut this crap OUT !!!

 

Why is the IRS so worried about wringing every penny out of those who are honest when our legislators let illegals steal that money?

 

We're giving money away to illegals, but we're suppose to all tighten our belts, do our fair share, get skin in the game. Bull (*)(*)(*)(*)!!!! Raise my taxes, my ass!!!!

 

If anyone thinks Americans are going to give in over and over to this looting of our tax money they are gravely mistaken. This ain't Europe.

 

Libs want tax increases, yet turn a cheek to the hemorrhaging of our tax dollars.

 

Why should we let the Government raise our taxes when they waste them on things like this? If the administration wants us to agree to increased taxes, they have to start showing responsibility with what we give them now. Close these loopholes, end the billions of dollars being wasted through practices like these, then we can talk about increasing taxes.

 

One of my family's friends is prepares taxes in the USA. This is a true story:
One day a Mexican man walked in to get his taxes done. He was told about the child tax credit, then asked how many children he had. "How many children do you want?" replied the Mexican.

 

No, only the rich can loot you legally.

Is what these people are doing illegal? Doesn't look like it is. Whose fault is it that this happens then?

Do you want to persecute the rich who pay sharp accountants to deliberately seek out and use tax avoidance loopholes? Don't think so.

What is that then, class snobbery? I thought you didn't hold with the class unfair treatment thing.

All citizens are supposed to be treated equally in law and in tax. Why don't you go after the idle rich with the same veracity? If you can get them to pay tax at all, it will be worth much more.

If the rich can evade paying tax through loopholes and write off tax via "charity" contributions...

 

Illegals are not citizens.

What they are doing is illegal, as they are using fraudulent credentials to obtain the refunds.

 

Your predecessors didn't have any kind of credentials, most of them couldn't even write their names. You have strangely misspelt Euronames because when your ancestors arrived, the person taking their names wrote them down phonetically.

You want to make up your mind what your country is. It's either the land of immigrant opportunity for all where loopholes are great and snobbery and exclusion are bad ideas, or it's the land where you do your own dirty work and don't need any immigrant short of a degree. You want both. You want people you view as less than you to do your menial labour but you don't want them to have any rights. Well guess what. The people you deem menial have brains and can work your system in the same way the global rich rip you off.

But it doesn't just happen in US. There are issues like that everywhere viable. If you have a decent country, it attracts people who can make money out of nothing and they sometimes take a while to be assimilated and feel a responsibility toward the new community...usually they start wanting to contribute when they feel established and welcome and part of the community and therefore subject to peer pressure and cultural influence...i.e. when you care about their welfare, they will care about yours.

 

We are a land of laws. There is a legal way to live and work in the U.S. Follow our laws. Do not illegally suck off of law-abiding citizens. Millions upon millions of immigrants have come to the U.S. the legal way. This abuse happening to our hard-earned tax dollars is a slap in the face to everyone who did the right thing.

 

I want our govt to NOT waste our hard earned money and be more accountable, Viv.

 

How accountable do you want global corp to be? Or is it just the vulnerable you're after ...

 

Bla bla bla...indeed it's a credible tale. An undisclosed person disclosed some previously disclosed "information" which was disclosed to the IRS and which it has been in possession of for many years and has acted on...but not to the satisfaction of your undisclosed source...who is not prepared to disclose his name or stand by the allegations he is alleged to have made.

This unsubstantiated report is evidenced by what? Facts and figures? Yes, yes, the man in the mask says he has lots of evidence and the reporters produce some more masked men to say they did it (why?) after paying their taxes, they claimed a rebate. If the rebate was paid for nieces and nephews, I have a few here. Is it all right if I come over and claim for them?

 

Quit making excuses for these law-breakers.

 

Which law breakers, those who have much more wealth than anyone could ever need but deliberately evade paying the taxes they are morally obliged to pay whilst laughing in your face and the face of every person who is manipulated into focusing on racism and exclusion? Righto then

 

I just read this today. Quote: " Illegals are receiving more than $ 4 billion of taxpayer funded refunds
by taking advantage of The Child Tax Care Credit. This needs to be addressed by Congres Immediatly."
It would not hurt if you called your congresman and senators and demanded that they do something about
this. jrsutton

 

Quit diverting. Corporations and individuals, even yourself, use legitimatete avenues in the tax code to reduce your tax burden.

Illegals are not even entitled to any loopholes.

There's a difference.

 

That's what this thread is about. I have already informed my reps about my disgust with this.

 

Ahahaha....illegals are not even entitled to any loopholes. Are you reading what you write? Those who happen to be illegal are entitled...no REQUIRED...to pay taxes but hypocritically they are not entitled to find the odd loophole as the rest of the more righteous and special taxpayers are.

Excuse me, I feel queasy.

 

Illegals are NOT entitled. Where do you get that they are? Excuse me, I feel even more queasy.

 

Quote from your OP

...they are required to pay taxes. If they are require to pay taxes, why should they be excluded from claiming tax rebates like everyone else who pays taxes?

And...finding big gaping loopholes, exactly as your rich do.

 

I'm glad to hear you contacted your reps. That will do more good than all the dialog. ONALiNE also
got the point. Illegal aliens use our system to get money because Bush Jr., Obama and Congress
allow it to continue. Americans needs to stay in touch with thier congressman and senators and hold
them accountable. That is what I do. They do not like to be told they are letting Americans down.

jrsutton