Illicitly Providing Tax Benefits to Illegal Aliens

It's Time to Rein in the Rogue IRS

By Dan Cadman on July 3, 2017

One of the Center's Board members, Jan Ting, recently penned an interesting blog concerning the Internal Revenue Service (IRS), which, despite its reputation for doggedness where citizens' tax filings are concerned, appears to be more than willing to permit certain aliens to get away with violating the law.

The specific issue Ting wrote about was illegal aliens claiming child tax credits: "These child tax credits are being provided by the IRS to illegal aliens notwithstanding that the Personal Responsibility and Work Opportunity Act of 1996 (PRWOA) long ago provided that an illegal alien 'is not eligible for any Federal public benefit.'" As Ting notes, a federal appeals court has ruled that provision of those credits to illegal aliens constitutes the equivalent of a public benefit and therefore is unlawful — notwithstanding which it appears that the IRS is going to continue a long policy of "don't ask-don't tell" where it comes to these illegal-alien claimants, and continue to give away finite federal taxpayer dollars.

What Ting's blog didn't delve into was the other pertinent fact surrounding claims of these child tax credits by illegal aliens: They are often downright fraudulent, which is something my colleague David North has written about eloquently and frequently (see, for instance, here and here). As North notes, the Treasury Inspector General for Tax Administration (TIGTA), the watchdog of the IRS, has more than once reported on this area of abuse and yet the IRS has done nothing.

Now the TIGTA has issued a new report on yet another area of abuse of the federal tax system by illegal aliens: "The Number of Employment-Related Identity Theft Victims Is Significantly Greater Than Identified". According to the Inspector General:

IRS processes are not sufficient to identify all employment identity theft victims. For example, 497,248 victims, who did not have a tax account in Processing Year 2015, were not identified even though identity thieves electronically filed tax returns with evidence that they used the victims' Social Security Numbers (SSN) to gain employment. For another 60,823 victims, who have a tax account, the IRS did not update their account with an employment identity theft marker. In addition, IRS processes do not identify employment identity theft when processing paper tax returns...TIGTA projects that the IRS did not identify 272,416 victims of employment identity theft for the 685,737 paper tax returns filed by ITIN holders reporting wages in Processing Year 2015.

TIGTA also identified that the IRS does not have processes to identify employment identity theft in the IRS's Form W-2 perfection processes or to notify the Social Security Administration of the crime when both the victim's name and SSN are used by an ITIN holder.

In gauging the relevance of this report to the issue of immigration, what is important to know is that the acronym "ITIN" stands for Individual Taxpayer Identification Number. It is a substitute for a Social Security number when the individual — almost invariably an alien — is ineligible to apply for a Social Security account. Aliens use ITINs (when they file taxes at all) because they cannot legitimately obtain Social Security accounts, and therefore the numbers and cards that pertain to them.

The most disturbing part of the new report, to my way of thinking, is this: TIGTA recommended seven specific actions that IRS needed to take both to safeguard its own tax collecting and disbursement processes and, equally importantly, to safeguard taxpayers and legitimate Social Security card holders against identity theft. Yet, "IRS management did not agree with five of the recommendations. As a result, actions are not being taken to assist 548,968 victims of employment identity theft." This is beyond disturbing; it beggars belief. Why would they not accept the TIGTA's recommendations?

IRS, readers may know, is an agency that, incredibly, harbors employees who are themselves tax scofflaws. It is also the agency that, under Commissioner John Koskinen, surreptitiously targeted conservative nonprofit organizations during the Obama administration. And who is currently heading the IRS notwithstanding the swearing-in of President Trump last January. Why, John Koskinen? If this is not the classic definition of a rogue executive branch agency, I don't know what is.

It is past time for this administration to dump Koskinen and install, even if by recess appointment (a favorite Obama tactic), a new commissioner, one who will clean house, stop the IRS from giving away federal tax dollars to illegal aliens under a multiplicity of programs, and — who knows — maybe even start cooperating with federal immigration agents in pursing identity theft and tax fraud when committed by illegal aliens. What a novel idea.