Tuesday, September 6, 2011

Illegal Immigration Tax Break?!


Throughout the entire debt ceiling imbroglio, Democrats incessantly regurgitated the talking point about the need for “a balanced approach.”  They were so uniform and synchronized that they sounded like the sheep in Animal Farm.  Ironically, their idea of a balanced approach was singularly focused upon Oil Company and corporate tax deductions, which are negligible compared to the crushing debt.  The targeted oil tax deductions would have brought in $2 billion in annual revenue, while the cancellation of the corporate jet depreciation deduction would have saved only $3 billion over 10 years!
Well, it turns out that illegal aliens, most of which pay zero in net taxes, enjoyed $4.2 billion from the Additional Child Tax Credit (ACTC) last year.  That’s more than the annual revenue from the selected oil tax deductions and corporate jet deductions combined!
Yesterday, the Treasury Inspector General for Tax Collection released a shocking report detailing how illegal aliens are able to utilize a filing loophole to obtain billions in ACTC funds.  The Earned Income Tax Credit (EITC) and ACTC (unlike the base child tax credit) are totally refundable and can award the recipient with a negative tax balance.  Appropriations for the EITC in FY 2010 were $54.7 billion and $28.3 billion for the ACTC.  While EITC appropriations are protected from illegals (those who don’t engage in identity theft) because they are only awarded to those who provide a valid Social Security number, the same cannot be said for the ACTC.
Here is the punchline of the Inspector’s report:

Many individuals who are not authorized to work in the United States, and thus not eligible to obtain a Social Security Number (SSN) for employment, earn income in the United States.  The Internal Revenue Service (IRS) provides such individuals with an Individual Taxpayer Identification Number (ITIN) to facilitate their filing of tax returns.  Although the law prohibits aliens residing without authorization in the United States from receiving most Federal public benefits, an increasing number of these individuals are filing tax returns claiming the Additional Child Tax Credit (ACTC), a refundable tax credit intended for working families.  The payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts Federal law and policy to remove such incentives.
Because concerns were raised by Congress, the Government Accountability Office, and the IRS regarding noncompliance with EITC requirements, a law was passed in Calendar Year 1996 to deny the EITC to individuals who file a tax return without an SSN that is valid for employment.  As such, filers using an ITIN are not eligible for the EITC.  The change in the law was made prior to the establishment of the ACTC.   However, the same law prohibits aliens residing without authorization in the United States from receiving most Federal public benefits, with the exception of certain emergency services and programs.
Nonetheless, IRS management’s view is that the law does not provide sufficient legal authority for the IRS to disallow the ACTC to ITIN filers.  In addition, the Internal Revenue Code does not require an SSN to claim the ACTC and does not provide the IRS math error authority to deny the credit without an examination.  As such, the IRS continues to pay the ACTC to ITIN filers.
According to the latest employment data, we’ve lost 2.57 million jobs since Obama took office, even though there are 5.1 million additional people of working age in the country.  Illegals are not only competing for scarce jobs; they are enjoying billions in handouts ensconced in the tax system, due to willful negligence on the part of the IRS.  For most Americans, they are the most belligerent agency in the government, yet they are suddenly indolent in going after illegals.  Obama wants them to clamp down on tax deductions for corporations that pay billions in taxes, while blithely allowing them to ignore billions in refundable handouts to those who shouldn’t be here in the first place.
Talk about a balanced approach!

This ought to "frost" everyone's cake!

~Lordhawke

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