The Verify First Act: A Common-Sense Measure to Protect Tax Dollars

By Dan Cadman, June 16, 2017

The House of Representatives passed this week H.R. 2581, the "Verify First Act", sponsored by Rep. Lou Barletta (R-Pa.). The bill would require government agencies, including the Social Security Administration and the Department of Homeland Security, to verify the citizenship or lawful alien status of individual claimants before the Internal Revenue Service (IRS) would be permitted to issue advance payment for credits allowed under the provisions of the Patient Protection and Affordable Care Act (Obamacare).

The bill represents common sense: Why pay out credits to fraudulent claimants and illegal aliens without checking first? Sadly, common sense is often in short supply in our capital city, as well as underneath the rotunda of the Capitol itself.

The credits that Rep. Barletta's bill focuses on are relatively new, in that they were created by passage of Obamacare. Just as individuals who cannot prove that they are insured must pay a tax penalty, inversely, other individuals become entitled to a refundable credit for healthcare premiums if they meet certain economic and filing status thresholds.

It is that refund the fraudsters seek, and if they can obtain it in advance — that is to say, before the individual whose identity they have stolen actually files his tax return to either seek the credit himself, or conversely establish that he's not entitled to it — then they have the money and can disappear before it catches up to them. But even absent outright identity theft, if there is no attempt on the part of the IRS to verify the individual's status, he may be obtaining a refund payment to which he is not entitled as a matter of law; aliens illegally in the country are not as a whole encompassed within Obamacare.

Anyone who is half awake is aware of how often, and apparently how easily, fraudsters have been able to manipulate the IRS in recent years to file false tax claims for refunds by stealing the identities of the real taxpayers, who often must clean up the mess left behind from the theft even though, as often as not, it was precipitated by holes in the taxpaying system and not through any fault of their own. The new premium refund thefts are simply enlargements on the same old theme.

Refund theft has become a huge problem for the IRS and it has had slop-over effects in other government departments as well, such as the Justice Department, which expends considerable time and effort attempting to combat such theft.

Defrauding the IRS and stealing the hard-earned taxpayer dollars we pay into the system has become a lucrative business not just for large criminal organizations, but also for small-scale rip-off artists. Barletta's bill would at least help curb one of the many ways in which the tax system is scammed, including by aliens not entitled to the credits they are claiming.