ITIN: The Massive Tax Loophole Allowing Illegal Aliens to Defraud American Citizens

 In NATIONAL, Trump

One year in Atlanta, GA, in excess of $46 million in ITIN refunds were sent to a single address by the IRS for 24,000 illegal aliens who reportedly listed that same address on their tax returns.

 

Written by Megan Barth and ExHuntress

In 1996, the IRS began issuing a new type of tax identification number, the Individual Tax Identification Number (ITIN). ITINs are assigned to U.S. taxpayers, predominately illegal aliens and their dependents, who are not eligible to obtain a Social Security number.  The primary purpose of ITIN’s was to capture the previously untapped source of new federal tax revenue from undocumented workers.

  • According to the National Immigration Law Center, the most recent information (August 2012) indicated that there had been 21 million ITINs assigned to taxpayers and their dependents by the IRS.  
  • ITINs assigned to illegal alien dependents from Mexico do NOT have to prove that they have ever set foot in the U.S., let alone that they are in the U.S. at the time of application.  
  • Over 9 years and up to 2010, the IRS paid over $14.2 billion of American tax dollars in refunds to illegal aliens, for alleged dependents from whom no identification or residency documents were obtained, and from whom they received $0 in tax revenue.

ITIN is Shovel-Ready Fraud

According to the IRS, ITINs are allegedly issued solely as a means for illegal aliens to pay federal taxes, but in reality they are used by more illegal aliens who actually pay no taxes and who file federal tax returns only to claim tax refunds mainly through the Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), and the Earned Income Tax Credit (EITC), on a retroactive basis (up to 3 years).  The Child Tax Credit may allow the filer to reduce their federal income tax by up to $1,000 for each qualifying child.  Under ITIN, illegal aliens can claim up to TWENTY children.

According to the IRS, a qualifying child is a son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or descendant of any of them; for example, a grandchild, niece, or nephew, who was under age 17 at the end of the tax filing year, and who did not provide over half of his or her own support for that year.  The child must have lived with the filer more than half of the year with exceptions available, is claimed as a dependent on the filer’s return, does not file a joint return for the year, and is a U.S. citizen, a U.S. national, or a U.S. resident alien.  

Yet, while a child is supposed to be a U.S. resident to qualify as a dependent for ACTC, they do not have to prove residency if they are from Mexico or Canada.

It should be noted that the ACTC is an available tax credit in addition to the credit for child and dependent care expenses, as well as the earned income credit.  In addition, illegal parents can use ITINs to file refund claims for U.S. born, as well as undocumented dependents.  For taxpayers who may not be able to take full advantage of it because the credit is more than the amount of taxes they owe, the Additional Child Tax Credit is the refundable amount of credit that is available above the amount needed to offset their taxes.  This means that families can receive refunds even if they do not owe any tax.

Under the American Recovery and Reinvestment Act (ARRA), commonly referred to as the “Stimulus,” signed into law by Barack Obama in February 2009, the minimum earned income amount used to figure the ACTC was reduced to $3,000, from its scheduled amount of $12,500.

Lowering the minimum earned income amount made it possible for more families to claim refunds and also significantly increased the amount of refunds received.  This one step effectively created the vehicle for the subversive funneling of billions of American taxpayer dollars to millions of illegal immigrants without their having to pay any income taxes, or the need for messy and unpopular Congressional debates over additional benefits for illegals.

Si Se Puede Break Federal Law

Section 8 USC 1324 (a) (1)(A)(iv)(b)(iii) states, “Any person who…encourages or induces an alien to…reside…knowing or in reckless disregard of the fact that such…residence is…in violation of law, shall be punished as provided…for each alien in respect to whom such a violation occurs…fined under title 18…imprisoned not more than 5 years, or both.”  Further noted in section 274 felonies under the Federal Immigration and Nationality Act, INA 274A:

A person (including a group of persons, business, organization, or local government) commits a federal felony when he or she:

  • Assist an alien he/she should reasonably know is illegally in the U.S. or who lacks employment authorization, by transporting, sheltering, or assisting him/her to obtain employment, or
  • Encourages that alien to remain in the U.S. by referring him/her to an employer or by acting as employer or agent for an employer in any way, or
  • Knowingly assist illegal aliens due to person convictions.

Illegal immigration advocates aggressively push the use of ITINs for identification purposes as an alternative to Social Security numbers. According to the National Immigration Law Center, ITINs may also be used and accepted for such reasons as opening interest-bearing bank accounts, to reduce the tax withholding rate for employment-related settlement payments (such as workers’ compensation claims/lawsuits), for obtaining a mortgage, to claim insurance-premium tax credits for family members eligible for health care coverage under the Affordable Care Act, and to establish eligibility for an exemption from the mandate requiring health insurance since illegal aliens are excluded from all Affordable Care Act benefits.

In clear violation of Section 8 USC 1324 and the INA, twelve states and the District of Columbia allow illegal aliens to obtain drivers licenses, some of which specifically refer to the ITIN as one of the documents accepted to prove identity and residency.

What makes this even more pathetic than blatant disregard for existing federal law is that according to the IRS’ official ITIN application (Form W-7) instructions, dependent applicants must prove identity and U.S. residency UNLESS the applicant is from Mexico or Canada.  Therefore, ITINs assigned to illegal alien dependents from Mexico do NOT have to prove that they have ever set foot in the U.S., let alone that they are in the U.S. at the time of application.

There are clear immigration laws in effect today, yet many in the country, some of whom are federal, state, and local officials, choose to ignore them…and without apparent consequence.

To what extent might the issuance of ITINs be a problem for the safety and sovereignty of the U.S., and at what cost to American taxpayers?

Si Se Puede Bankrupt the United States

According to the National Immigration Law Center, the most recent information (August 2012) indicated that there had been 21 million ITINs assigned to taxpayers and their dependents by the IRS.  Therefore, assuming the number of ITINs has not decreased since 2012, it’s reasonable to believe that there have been at least 21 – 25 million ITINs assigned by the IRS, since 1996.  And although the IRS states that it does not track legal status, it does state that it suspects approximately 55 to 60 percent of ITIN recipients would be illegal aliens.

While there is no doubt that taxes are initially collected from the paychecks of illegal aliens, that does not guarantee that those same illegals actually paid any taxes, but, yet they still received substantial monies from their returns in the form of various refundable credits.

According to audit reports from The Treasury Inspector General for Tax Administration (TIGTA), dated March 31, 2009, and July 07, 2011, the Inspector General examined nine tax years (2000, 2001, 2004, 2005, 2006, 2007, 2008, 2009, 2010) to determine the amount of ACTC refunds the IRS paid to people using ITINs, who were technically “not authorized to work” in the United States.

Over those nine years, TIGTA identified $14.228 billion (just through 2010) in ACTC refunds to illegals.  Remember, by definition, ACTC refunds are paid to people who had zero tax liability.  In other words, for those nine years alone, the IRS paid over $14.2 billion of American tax dollars in refunds to illegal aliens, for alleged dependents from whom no identification or residency documents were obtained, and from whom they received $0 in tax revenue.

To make matters worse, several investigations, including an extensive investigative report conducted by 13WTHR Indianapolis, highlighted numerous concerns brought to light initially by IRS whistleblowers, and subsequently substantiated by TIGTA, which identified an even more troubling pattern of incompetence, at best, on the part of IRS workers and managers.  For example:

  • One year in Atlanta, GA, in excess of $46 million in refunds were sent to a single address by the IRS for 24,000 illegal aliens who reportedly listed that same address on their tax returns.
  • Near Detroit, 604 ITIN numbers and 640 tax refunds were issued by the IRS to a single address that had previously been rejected based on questions of its legitimacy.  Regardless, the IRS ultimately issued over $1.5 million in tax refunds to that same address.
  • One year in Indianapolis, the IRS issued 8,714 ITINs to undocumented workers, all of whom claimed to have the same address.
  • One illegal alien admitted that he lived in his single-wide mobile home with his small daughter; however his address was used by four of his illegal friends.  That year, over $29,000 in ACTC refunds were sent to that mobile home by the IRS.

For over a decade, TIGTA has been conducting audits and making recommendations to the IRS and Congress regarding high levels of fraud within the ITIN program.  To date, there has been very little (zero) progress made to curb the fraud and abuse in the ITIN program, despite several damning audit reports by TIGTA.  In fact, the IRS, with the help of Obama, has doubled down on the efforts to allow more undocumented aliens to keep and even extend their tax credit eligibility status.  Before leaving office, the former president offered illegal aliens yet more tax credit payments via the Earned Income Tax Credit (EITC), which is currently unavailable to those who cannot obtain a SSN.  Under his executive action, up to 5 million illegal aliens temporarily avoided deportation by “deferred action.”  At the same time, the Chief Counsel’s officer of the IRS ruled that although EITC is not available to ITIN filers, when a person subsequently obtains a SSN, he/she can file amended tax returns to claim the EITC for the three preceding years they only had an ITIN.  This is estimated to offer bonuses in excess of $24,000 to those who receive deferred action.  In essence, the IRS and Obama further subsidized illegal entry to the U.S. with the promise of four years’ worth of new tax credits.

Even more outrageous? The IRS refuses to share information with other federal agencies, including the Immigration and Naturalization Service (INS), in direct violation of the Illegal Immigration Reform and Immigrant Responsibility Act of 1969, as well as The USA Patriot Act of 2001.  So while american seniors didn’t get a cost of living increase through Social Security this year, windfalls of our tax dollars are being paid to illegal aliens and their twenty “children.”

XHuntress Bio

Over 30 years in law enforcement and investigations in criminal and civil matters spanning the United States and Canada.  Certified Forensic crime scene investigator. Restitution awards and recoveries totaled in the hundreds of millions of dollars. Clearance and conviction rate above 95 percent out of thousands of criminal and civil investigations.

Written extensively on major crimes,  fraud schemes and provided classroom and practical instruction to local and state law enforcement officers, as well as medical and legal professionals with regard to forensic investigations, processes and procedures.

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Showing 10 comments
  • Bob Bofelli
    Reply

    Heard you on Lars Larson. That website you lost was controlled by Amy Ellison Creative , did you check with them?

    • ReaganBaby
      Reply

      Yes. Lawyers are involved. I own/owned the domain.
      Thank you, RB

  • deanne desoto
    Reply

    i looked this up when i saw it then looked it up later that day and the government issued a statement changing the laws. good job they may have played with your site but it was worth it. the truth is out there and you just gotta write it;)

  • Walter Gibbs
    Reply

    Excellent exposure of the massive fraud caused by illegal aliens. Im one of those seniors who paid hard earned dollars into the US Treasury so it is with total shock and awe that i read this article. Keep up the good work because for years people like me have wondered just how these illegal are able to come here with wet pants and eventually have more resources than someone who has played by the rules all of his life. What a betrayal by the former presidents the IRS, Congress and all government agencies entrusted by the people. Thanks for enlighting and making me aware of this massive RICO criminal scheme.

  • laurie
    Reply

    Its all about the money & Votes! Very simple!

  • Susan
    Reply

    I agree with Walter

  • Bill Miller
    Reply

    Thank you for the information.
    Now how do we get Trump To Change this ?

  • Rod Hatcher
    Reply

    Thank you for bringing this to my attention. I appreciate the work that goes into composing a report of this nature.

  • Edith Garcia
    Reply

    Firstly, is not illegal at all to have a different address for receiving your mail…
    Secondly, those having an ITIN number get the report for their employees to fill out the tax form, and they get tax returns accordingly on how much money THEY made, not on how much YOU made…
    And finally, if there is any fraud, that’s NOT on undocumented immigrants because in order to get an ITIN number they have to send ORIGINAL documentation for their dependents and themselves…
    So plz, stop spreading hate and if you feel proud targeting undocumented immigrants (specially Mexican I guess) at least be honest with yourself
    Remember, only liars believe lies

    • ReaganBaby
      Reply

      Wrong on all accounts. Take your BS back to Daily Kos.

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