Growls

At the Washington Post’s blog, Federal Eye, today, Lisa Rein writes (HT Mark Levin):

“The Internal Revenue Service allowed undocumented workers to collect $4.2 billion in refundable tax credits last year, a new audit says, almost quadruple the sum five years ago. (emphasis added)

“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 these 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.”

In it’s report (.html and .pdf), the Treasury Inspector General for Tax Administration (TIGTA) described the impact of its findings on taxpayers this way:

“Many individuals who are not authorized to work in the United States, and thus not eligible to obtain a Social Security Number (SSN) for employment, earn income in the United States.  The Internal Revenue Service (IRS) provides such individuals with an Individual Taxpayer Identification Number (ITIN) to facilitate their filing of tax returns.  Although the law prohibits aliens residing without authorization in the United States from receiving most Federal public benefits, an increasing number of these individuals are filing tax returns claiming the Additional Child Tax Credit (ACTC), a refundable tax credit intended for working families.  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.”

In her reporting at the Federal Eye blog, Ms. Rein wrote that Sen. Orrin Hatch (R-Utah) “announced plans to examine the refunds” based upon his position as ranking member of the Senate Finance Committee, and added:

“The audit recommended that the IRS seek clarification on the law and check the immigration status of filers with taxpayer indentificaion(sic) numbers.

“IRS officials, in response to a draft of the report, agreed to consult with the Treasury Department on the law. But they said they have no legal authority to demand that filers prove their legal status when the tax agency processes returns.”

Is there any wonder why the TEA Party movement gains new adherents every day?

UPDATE (9/3/11): Here's Fox News' take on this story. They begin with the rhetorical question: "Talk about a tax loophole."

UPDATE (9/3/11): The American Thinker today notes that Senator Orrin Hatch (R-Utah) "nailed it," opining:

". . .  The irony is depressing. The IRS will use all of its powers to go after some poor guy who owes a few thousand bucks but won't lift a finger to stop illegals from cheating the government.

"Something is wrong with that picture."

UPDATE (9/4/11): In a weekend editorial, Investor's Business Daily makes the astute observation:

"The IRS claims it's not its job to check the immigration status of those requesting U.S. money (easily done if a filer has a valid Social Security number instead of a "taxpayer ID").

"The tax agency apparently thinks laws only apply to people it audits — not politically sensitive illegal aliens.

"So now we have the sorry spectacle of $4.2 billion in money from law-abiding taxpayers flowing to law-breaking foreigners who belong in other countries."

UPDATE (9/6/11): Today's newsletter from the Federation of Americans for Immigration Reform (FAIR) notes that TIGTA made similar recommendations in 2009; presumably if those recommendations had been implemented, the IRS would not have paid $4.2 billion to people who should not be in the country illegally.