Illegal workers exploiting tax credit

September 7, 2011

A federal tax law passed in 2001 intended to widen the income tax collection net apparently had the opposite effect, opening the floodgates for massive fraud, according to a recent government report.

Undocumented individuals not authorized to be employed, milked U.S. taxpayers to the tune of $4.2 billion in 2010, asserts the Treasury Inspector General for Tax Administration, (TIGTA) a federal investigative auditing agency.

“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,” the report’s author’s claim.

Most of the fraudulent payments were for child tax credits and went to employed, undocumented workers, who, in order to obtain work, had previously secured false documentation.

A red flag was raised when that agency’s auditors noted “a significant volume of these returns claiming the Additional Child Tax Credit.”

The TIGTA report said questionable child tax credit claims in 2005 were $924 million, the current level of payout nearly four times that amount.

Internal Revenue Service tax codes require every individual who earns an income to file a tax return. So, undocumented workers file for refunds of their paycheck withholding, and then inflate the number of tax credits due them. When the value of those credits exceed undocumented workers’ tax payments, the difference is refunded in cash.

The auditing agency suggested that as more and more undocumented workers gain possession of false identification, tax credit fraud will intensify. Proposals for legislative solutions have been forwarded to Congress, the report concluded.



  1. WiseGuy says:

    When is the government going to get out of the way and let the free-market work? All these government regulations that restrict immigration are another example of “big government” getting in the way of capitalism, right?

    (-2) 4 Total Votes - 1 up - 3 down
  2. tomjones says:

    Wait a minute…which is it? I thought we don’t like illegals because they don’t pay taxes – reap the benefits of our system without paying into it. Looks like they do pay taxes, they just cheat on them like most Americans already do. Good to know. No more arguing that illegals are bad because they don’t pay into the system.

    (-2) 6 Total Votes - 2 up - 4 down
  3. Ugluk says:

    A good first step to disincentivize illegal immigration would be to mandate the use of E Verify every time someone is hired. If, after using E Verify, the employer decides to hire an illegal alien he should face harsh punitive measures. If we take away the honey the flies will leave.

    (8) 8 Total Votes - 8 up - 0 down
  4. mkaney says:

    I find it amusing that so many people are always referencing how the illegals are LAWBREAKERS (“GASP”)! What a holier than thou sentiment. Put yourself in a situation where your family is hungry and you need to do what you need to do to survive. What do you value more, your status as a LEGAL citizen, or the lives of your families? You would do the same thing, and if you wouldn’t, well then I’d hate to be in your family should you ever fall on hard times.

    Be grateful for what you have, or are not self righteousness and lack of humility considered bad traits any more? Again, illegal immigrants ARE NOT a net drain on society. If any of you bothered to do the math, instead of fall back onto your racist sentiments, you’d realize that.,

    (-18) 22 Total Votes - 2 up - 20 down
    • easymoney says:

      I find it amusing that so many uninformed people are so quick to attack other posters and call them rascists just because of their opinion of obvious law breaking entrants.

      You might watch this video example, that even children can understand…

      (14) 14 Total Votes - 14 up - 0 down
      • mkaney says:

        This humanitarian/world hunger argument is not one I have made, nor that I have even heard made. This is what we call a “straw man argument”… finding an argument that is not being made that is easy to demonstrate to be wrong, and repeat that over and over.

        (-5) 7 Total Votes - 1 up - 6 down
    • Disgusted says:

      Look in the mirror for that “holier than thou sentiment”? I think you confuse racism with respect for the laws of our country. If you really care about starving people, I assume you contribute in any way you can to the millions throughout the world facing starvation as we speak. So, tell us why you’re amused by those that refer to non documented citizens as “lawbreakers”. What other types of lawbreakers are you willing to excuse and SUPPORT?

      (12) 14 Total Votes - 13 up - 1 down
      • mkaney says:

        You “respect” the laws of our country for one reason, it is CONVENIENT for you. If, however, you were totally destitute, would you not be willing to break some laws to better take care of your family? If not, then you’re either a liar or lousy parent.

        (-5) 5 Total Votes - 0 up - 5 down
        • Disgusted says:

          Lol. A lousy parent breaks laws and is a bad role model. Btw, it’s not always convenient to respect our laws, but it’s the right thing to do. Defending illegal activity is wrong on so many levels. You’re a confused individual.

          (0) 0 Total Votes - 0 up - 0 down
          • WiseGuy says:

            “disgusted”, have you ever “fudged” on your taxes (like buying something on-line from out of state and not reported it and paid appropriate tax) or driven over the speed limit, or gotten a parking ticket? If you say Yes, then you are also a law-breaker. If you say NO, then I think you may be a liar. What makes you so special and “holier-than-thou”? Because you were born in the U.S.?

            (0) 0 Total Votes - 0 up - 0 down
            • Disgusted says:

              I’ve not fudged on my taxes, but I received a traffic ticket for which I paid a fine. I was punished, as I should have been. Those of you who condone illegal activity surprise me. And if you knew me, you’d laugh at the accusation of bein a racist. But, hey, most people I know are law-abiding and certainly haven’t entered a country illegally as well as cheating that country again by tax crimes, so I’ll just be thankful for that, and you go on being you.

              (0) 0 Total Votes - 0 up - 0 down
      • jimmy_me says:

        “Respect for the laws or our country”??? Didn’t it used to be the law that we had to pay taxes to the king of England?

        (0) 0 Total Votes - 0 up - 0 down
    • Cindy says:

      I watched a documentary last night that showed how Mexicans leave their “JOBS” in their home country and come here illegally because not only can they earn so much more money but their families get free food, medical and their children get fed at school and a better education all on the American’s. They even talked about how they get free housing if they have a baby here.

      (11) 11 Total Votes - 11 up - 0 down
      • easymoney says:

        cindy, watch the video I posted above,
        it clearly explains what happens if you encourage uncontrolled immigration,illegal or otherwise(regardless of where the immigrantscome from or the nations that take them in) and what happens to those people and their home countries when they flee intsead of staying and bettering their own nations and way of life for all their fellow country men…

        (5) 5 Total Votes - 5 up - 0 down
        • Cindy says:

          Yes I’ve seen the video before and it’s excellent. I subscribe to Numbers and receive all their updates.

          (3) 3 Total Votes - 3 up - 0 down
  5. jimmy_me says:

    Wrong is wrong, I suppose, but what the banksters did to the economy and our retirement savings somehow seems more wrong than the illegal alien issue. Maybe we should get the Seal Team to go after the economic terrorists in their NYC penthouses. Besides, we need illegal aliens to tend our back country pot farms.

    (-10) 18 Total Votes - 4 up - 14 down
  6. Ugluk says:

    I’m shocked, shocked, that illegal immigrant lawbreakers are breaking other laws.

    (19) 23 Total Votes - 21 up - 2 down
  7. unlisted says:

    This kind of cheating is nothing new, though the magnitude obviously is. I prepared income taxes in the 1970s and 1980s. In order to receive larger refunds, many of my “clients” claimed to be unmarried heads of households and to have additional dependents (often “in Mexico”). When the earned income credit was passed in 1975, the scams increased because they could get more.

    I’m all for the IRS cracking down on these tax frauds, as well as people with fraudulent “hobby” businesses and corporations that hide profits in off shore subsidiaries.

    (18) 18 Total Votes - 18 up - 0 down

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