Illegal Immigrants Received $4.2 Billion In Tax Refunds From IRS

Illegal Immigrants Received $4.2 Billion In Tax Refunds From IRS

Although not authorized to work in the United States, a growing number of illegal immigrants are receiving billions of dollars in Child Tax credits.  According to a recent Treasury audit, the IRS paid $4.2 billion in refundable tax credits to undocumented immigrant workers in 2010.  Although non-citizens are barred from working without authorization and from collecting tax benefits, the tax code’s lack of clarity has resulted in a rapid increase in refunds claimed by illegals in recent years.

The IRS issues Individual Taxpayer Identification Numbers (ITINs) to people without Social Security Numbers who cannot legally work in the U.S., in order that they can file tax returns.  Refundable tax credits claimed by illegals can result in refunds even when no income tax is withheld or paid, because the credits can exceed the liability for tax.  The U.S. tax code does not require a Social Security Number to claim the Additional Child Tax credit, and the IRS continues to pay the credit to ITIN filers.

According to the Treasury Inspector General for Tax Administration, the Additional Child Tax Credits claimed by ITIN filers has exploded from $924 million in 2005 to $4.2 billion in 2010.  “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,” the report said.

Immigration advocates argue that illegals are entitled to the Additional Child Tax Credit because they are paying into the system.  A study by the Institute for Taxation and Economic Policy found that undocumented immigrants paid about $11.2 billion in taxes in 2010, and that nearly half of all illegal immigrants pay income taxes.  On the other hand, a report released by the Federation For American Immigration Reform estimates that the annual cost of illegal immigration, in excess of what people pay in, is nearly $29 billion at the federal level and $84 billion at the state and local level.

TSCL believes that Congress must provide stronger measures to ensure that the IRS clamps down on refundable tax credit abuse and fraudulent claims by ITIN holders.  “With the Joint Select Committee for Deficit Reduction preparing to release a plan that may make big changes to Social Security, Medicare and to include tax reforms, tax abuse that provides an incentive for more illegal immigration should not be condoned and allowed to continue,” says Shannon Benton, TSCL Executive Director.

What you can do: Share this article with others.  To learn more about TSCL efforts to fight payment of Social Security and Medicare benefits based on illegal work, visit for more information.

Source:  “Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable Credits,” Treasury Inspector General For Tax Administration, July 7, 2011.  “The Fiscal Burden of Illegal Immigration on U.S. Taxpayers,” Federation for American Immigration Reform, July 2010.