House Passed Bill Seeks to End Illegal Immigrant Tax Loophole
The U.S. House of Representatives passed a bill last week that seeks to end the practice of illegal immigrants getting child tax credit refunds. Attention was brought to the issue after an investigative report by a local television news station went viral on the Internet.
Illegal immigrants are fraudulently taking advantage of the federal income tax's child tax credit to the tune of $4.2 billion per year, reported Bob Segall of WTHR, an NBC affiliate in Indianapolis, Ind., on April 26. Since even those who do not pay takes can receive the credit, illegal immigrants have found that they are able to receive $1,000 per child from the federal government by filing taxes.
In some cases, though, the fraud goes even further. Segall found cases in which undocumented immigrants were taking the tax credit for nieces and nephews for whom they are not legal guardians and do not live in the United States. Some received more than $10,000 from the federal government.
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Rep. Sam Johnson (R-Texas) sponsored the measure that would no longer allow undocumented immigrants to take the credit. It was added to a bill passed Thursday that seeks to offset planned cuts to defense spending with cuts to other parts of the federal budget. Johnson's measure would contribute $7.6 billion to the over $300 billion bill.
Johnson credited Segall's reporting for bringing attention to the issue in his public remarks on the House floor.
"Right now those who are here illegally can get cash from Uncle Sam by providing an IRS-provided tax payer ID number to claim this refundable credit. Illegal immigrants have gone so far as to file tax returns claiming children who do not live in America, according to a recent report by NBC Indianapolis' WTHR," Johnson said.
The Internal Revenue Service sent a letter to WTHR explaining that it had no authority to deny the credit to undocumented workers because they are allowed to receive the credit under current law. Johnson's measure would require a Social Security number in order to receive the credit.
Senate Majority Leader Harry Reid (D-Nev.) condemned the measure, saying that it unfairly targets the children of Latinos, who may be citizens of the United States even if their parents are not.
Sen. Claire McCaskill (D-Mo.) is the only Democrat to have publicly stated that she supports the measure so far.
"If there are rules, they need to be enforced. I think it's just that simple. I don't think it's complicated," McCaskill said.
The bill that Johnson's measure is attached to is unlikely to be voted on in the Senate. Democrats say that Republicans are cutting too much from social programs to pay for defense spending.
Since Segall's report went viral, a fact checking website, FactCheck.org, investigated the report.
"This is a rare case of an Internet rumor with some substance to it," FactCheck.org wrote Friday.
FactCheck.org noted that there was a Treasury Department inspector general report in July 2011, that found undocumented workers were paid $4.2 billion in refundable credits.
