IRS let undocumented workers collect $4.2B in refundable tax credits, audit finds
Read most of it here. Down a little farther you’ll find a link to the part that didn’t fit at the Daily Star.
The Internal Revenue Service allowed undocumented workers to collect $4.2 billion in refundable tax credits last year, according to a new audit - almost quadruple the sum five years ago.
Although undocumented workers are not eligible for federal benefits, the report released Thursday by the Treasury inspector general for tax administration concludes that federal law is ambiguous on whether those workers qualify for a tax break based on earned income called the additional child tax credit.
Taxpayers can claim this credit to reduce what they owe in taxes, often getting refunds from the government. The vagueness of federal law may have contributed to the $4.2 billion in credits, the report said.
The IRS said it lacks the authority to disallow the claims.
Sen. Orrin Hatch, R-Utah, ranking member of the Senate Finance Committee, announced Friday that he plans to examine the refunds.
“The disconcerting findings in this report demand immediate attention and action from Congress and the Obama administration,” Hatch said in a prepared statement. “With our debt standing at over $14.5 trillion and counting, it’s outrageous that the IRS is handing out refundable tax credits … to those who aren’t even eligible to work in this country.”
Wage earners who do not have Social Security numbers and are not authorized to work in the United States can use what the IRS calls individual taxpayer identification numbers. Often these result in fraudulent claims on tax returns, auditors found.
Hatch doesn’t have a problem with taking their money in taxes, he only complains about an attempt to have part of it refunded according to the rules.
The article originated at the Washington Post. The Arizona Daily Star decided to leave off these two paragraphs from the end:
Changes to tax law are partly to blame for the explosion in refunds for additional child tax credits in recent years, auditors found. [That’s the last sentence in the Daily Star version.] Before 2001, filers needed to have three or more children to qualify — and to owe more Social Security taxes than earned income credits.
But those requirements have been eliminated and the allowable refund for each child doubled. The American Recovery and Reinvestment Act of 2009 also made the refund easier to get, auditors found.
Both versions slip this in:
Often these result in fraudulent claims on tax returns, auditors found.
Neither says whether that fact applies to these cases. It looks like innuendo to me.