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.


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WiseGuy

The crazy law that essentially guaranteed this kind of tax system abuse was a “gift” from the BUSH administration. And more than anyone else it profited professional TAX PREPARATION COMPANIES that prey upon immigrants, “promising” them refunds if they pay to have tax returns filed.


In any case, this “fraud” involves only a small percentage of the federal tax that ILLEGAL immigrants pay, putting a lie to the often repeated falsehood that illegal immigrants “don’t pay tax.”


So, if the free market wants and can afford to hire these workers, in fact NEEDS these workers, why can’t they be permitted to work here? The free market deems their work to be vital to the economic viability of agriculture in our state, AND they pay taxes, so why not allow them easier access to become citizens?


zaphod

B is for Bingo and Bush.


mkaney

What is this nonsense? You want consistency of thought in the American voter? You expect the same people who beat the drum for free trade and low regulations to also beat the drum for the right of people to sell their labor on a free market? Blasphemy! lol


mkaney

This is a very twisted spin on this this story. The vast majority of illegal immigrants do not have valid social security numbers.. they pick up a forged card somewhere in LA, and then provide that to their employer. California Law only requires the employer to photocopy the card, to demonstrate that they have seen one, but not verify its authenticity.


So here’s the rub.. there are huge number people that have payroll tax withholding , that do not get any tax return because when the employer goes to file payroll documents with the SSA , those bounce back as invalid and tax returns are not sent out. In that larger picture, this is not about illegal immigrants taking a net amount away from the federal government, this is unrealized profit. There is a difference. One implies that someone made a profit, and then another party came and TOOK what was theirs. The other implies that you simply didn’t make as much as you COULD have from someone or some group. What was the NET GAIN when you INCLUDE money DUE but not returned to those without valid social security numbers?


WiseGuy

That’s a good point, mkaney. Once again showing these issues are rarely as “black and white” as so many people make them out to be.


Robert1

Fact-if they were not here we would not be having this conversation, if the feds did their job the states would not have to.

Another fact, illegal works but does not have a S.S. card, he does pay into the system and yes he can not get a refund. But when he sends his children to school, and has children at the local hospital for free all while his now American citizen children qualify for all government services is he ahead or has he been shorted?


mkaney

I like how everyone agreed with you, before they bothered to know the answer to your question. The answer is, he has been shorted. The U.S. federal government comes out on top, but since it is federal income tax it does not get redistributed to the states. So, don’t complain to the illegal immigrant about sucking up services, complain to the federal government about not redistributing that cash to the states who pay for the services. The illegals, believe it or not, are NOT a net “drain” on society.


Robert1

Guess you did not go to the link I posted where Los Angeles county spends $52 million a month, now go talk to the people there that are getting laid off because the county lacks funds, the same county that spends $1.6 BILLION a year on illegals and their families.

Pull your head out of the sand.


Cindy

mkaney, You’re dead wrong. These illegal workers are caught within 4 months of working with false documents and the employer is notified. They all know to claim 10 exemptions on their W4 forms and they don’t earn enough to pay state or federal taxes. What they do pay is social security. The one’s that do have an SS# that matches with a name and don’t get caught are the ones that file the “fraudulent returns”. You’re family is in business, just ask them how long it takes for the state to contact them after they file their quarterly DE returns that require the name, SS# and quarterly earnings of every employee. The state matches it up within 30 days.


The state doesn’t let that stuff go and often the employee in question will change the information, use a relatives ID or work under the table.


Here’s the REAL RUB folks. Often legitimate workers share their documents. No one notices or questions that the same guy is working at 3 different locations. The person who shares his documents gets back all the taxes including any extra social security that was paid in and in the end they collect it.


I worked in th agriculture industry for many years, I know what I’m talking about.


Robert1

I have read that Mexicans that have legal SS cards rent them out after they retire or take a few years off as well.

http://www.freerepublic.com/focus/f-news/1418069/posts

here is a example


gomeztogo

Non-news item IMO. Just an incendiary piece to stoke anger at a controversial subject.


–“milked U.S. taxpayers” — Is this the opinion section?


This just in, people cheat on their taxes! In other news, water is wet!


Let the down voting and name calling begin!!!!!


Robert1

Remember people, they just come here to do the jobs you lazy Americans won’t do.

That’s what the liberals have been telling us for 50 years and why we are over ran with illegal aliens.

But what they don’t want to talk about is the cost to our society, AND THE FACT THAT ONLY 4% work in the fields and the rest take away jobs from Americans.

http://en.wikipedia.org/wiki/Illegal_immigration_to_the_United_States

Imagine how clean the air would be if you removed the extra cars from the road, gas and water resources, schools hospitals.

Tax dollars would be available to American citizens not illegals.


LA Co Spent $52M On Anchor Babies In July,

http://googl/fdXy8

We are broke and they are ripping off the legally entitled citizens, period.


mkaney

You are wrong. They are making a net contribution, in actual dollars. They pay more in taxes than they take out in services, the problem is the allocation of the income taxes. One more way the feds keep the American public arguing over pointless issues.


Robert1

U.S.-Mexico Pact Revealed: Billions to Non-citizens-


http://www.prisonplanet.com/articles/january2007/050107Pact.htm


Cindy

Get ready, the propagandist will use this as a platform to further the Dream Act agenda, claiming that if we made them all legal, then they wouldn’t be able to cheat on all the tax dollars (4.2 billion worth) that they pay into the United States. When something like this gets released, you can most likely bet there is a hidden agenda or it will get turned around and spun with Obama in the lead


Bob

It was a illegal undocumented worker from Mexico with a AK47 that shot up the iHop in Nevada over the weekend!


easymoney

The reports are still speculating whether he was or not, he supposedly had an US passport.

How did he get a US passport and how did he get an AK, if he was a non citizen of the USA?


Cindy

How did he get an AK if he was an illegal? You didn’t really ask that question.


stopagenda21

Att. Gen. Eric Holder


Citizen

It’s interesting but disgusting to see how the major news networks have attempted to cover up his legal status. Even Fox News was part of the cover up. One news source said he was born in Mexico but had a valid US passport. Maybe someone can explain that one to me. How does a non citizen acquire a US passport. Do they really mean he had a Mexican passport authorizing him to be in the US? Why would they say he was born in Mexico instead of saying he was a Mexican citizen?


r0y

Obviously he bought his AK from the ATF, duh! ;-)


stopagenda21

Thanks for posting this here.


Disgusted

Why should we be surprised? Illegals break the law to come here, so why expect them to abide by other laws?


rallyraid

As long as our government continues to cater to those who break our laws nothing will change. Now we have a bill, AB 353 in the works that prevents impounding of vehicles when they pull over a driver and find they have no license. Proponents and bleeding hearts call it racism and admitted illegals who are predominately Mexican typically have no license when operation a vehicle here in the US. It was proven using Santa Maria as an example the majority of T/C’s are caused by unlicensed drivers who just happen to be illegal aliens and/or mexican, who would have guessed?. So what procedure will be utilized to get law breakers off the streets, ticket them and let them drive away still unlicensed and potentially clueless of how to operate a 4000 lb weapon safely?

Breaking the law is breaking the law, simple as that.


my2cents

I agree, the governent keeps shying away from these major issues!!


I still cant beleive they have a road sign like that down in Southern California. That explains so much!!!


winedude

I’ve seen both these signs and people running across I-5 near Camp Pendleton in southern California where I’ve seen them posted (the signs, not the people). Illegals running across the freeway have been killed in traffic…


mkaney

So then you won’t mind, when we need to target another group of people, if some relatively minor infraction you do on occasion now, like say jaywalking, is given a really harsh mandatory minimum… although you are an otherwise law abiding citizen. But that’s what we have to do in the name of justice right?


easymoney

“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.”

Bout sizes it up…


danika

Can documented immigrants or natural born citizen not do the very same thing? Seems tax credit fraud is available for all to exploit. I do agree that illegals should not even be here to be able to work and subsequently file tax return.


Cindy

The difference is that people who legally live and work here with legitimate SS#’s can be tracked down and made to pay the money back when they cheat on income tax returns. These illegals can’t even be found to audit nor can a bank account be located to attach.


They use their children to milk the rest of us taxpayers every way they possibly can. Forget the problem with the anchor babies, now they are just making them up! No doubt the bleeding hearts will call TIGTA racist.


r0y

CORRECTION, Cindy: “They use their children to milk the rest of us taxpayers every way we let them!


Let people cry racism. It’s cried so much, I truly am amazed when I actually see some sort of real racism (not the politically motivated kind).


danika

It is my understanding that they are using the IRS number given to undocumented workers and not false SS#s; the tell the IRS they are undocumented and the IRS gives them a number in which to file a tax return. The IRS doesn’t check further. They file their tax return claim chidren they may or may not have and get up to $1k per child as a refund, even when they paid no taxes.


We end up paying for their taxes, their lifestyles, their education, etc and for our own. Not very “fair share”-ish, is it? I


danika

Forgive my typos…it’s been an ugly day!