WTHR TV 13
04/26/12 Bob Segall
“Tax loophole Costs billions”
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.
"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.
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.
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."
"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.
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.
He later explained
none of the 20 children have ever visited the United States – let alone lived
here.
"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.
"Keep in mind, we're talking $4 billion per year," he said. "It's very
troubling."
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.
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.
Common Sense Review
This is the most ridiculous thing I have read… Wait no,
Obama is still President…
This country is in debt trillions of dollars and they let
tax dollars flow to non-citizens. How
does this make sense? The fact that so
many people are aware of it is beyond comprehension.
This year we had to pay out to local, state and fed for not
paying enough….We have paid enough!
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