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Undocumented workers claim tax credits Pt. 2

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POSTED: Tuesday, May 15, 2012 - 6:26pm

UPDATED: Friday, June 29, 2012 - 8:10am

In Part 1 of this story, we showed you the extent of the problem.

The Individual Taxpayer Identification Number was created in 1996.

It allows people with no social security number, mainly legal non-citizens and undocumented workers, to file income taxes.

But they also have found a way to file for the Additional Child Tax Credit.

And many times, they file for children they don’t support, who not only don’t live with them, but sometimes don’t even live in the US.

And the IRS pays out $4.2-billion a year for them.

The Treasury Department Inspector General told Internal Revenue back in 2009 that this was a problem.

He got virtually no action.

We decided to try to get a response.

The IG says, the ITIN should no longer be used for credits like this.

Congressman Louie Gohmert, agrees. He says they’ve tried to reign in these credits, and the solution needs to be even more fundamental.

 We did hear from the IRS at the end of the day. They sent us the follwing statement...

IRS Statement:

Eligibility for the Child Tax Credit and Additional Child Tax Credit does not depend on work authorization status or the type of taxpayer identification number used. Any suggestion that the IRS shouldn’t be paying these credits under current law to qualified individuals who hold ITINs is simply incorrect. The IRS administers the law impartially and applies it as it is written. If the law were changed, the IRS would change its programs accordingly. 

The IRS is very focused on preventing erroneous refund claims, and has procedures in place to evaluate questionable tax credit claims prior to issuance of a refund. The IRS has also introduced new requirements and higher standards on tax return preparers to ensure that they understand their obligations to assist taxpayers in preparing accurate returns.

You can see part 1 of this report here.

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