A two-part News 13 WTHR Indianapolis report uncovered a tax loophole involving undocumented workers that costs taxpayers over $4.2 billion a year. What’s worse is that the IRS has known about the problem for years.
Russell George, the U.S. Department of Treasury’s Inspector General for Tax Administration said that the IRS has known about the problem for years and that “the magnitude of the problem has grown exponentially.”
Undocumented workers have been taking advantage of a loophole called the Additional Child Tax Credit, a fully-refundable credit of up to $1,000 per child that was intended to help working families with children living at home. Not only are they claiming children within the U.S., they are also claiming children in Mexico.
How does this happen? All Americans, whether legal or illegal, who earn income are required by law to file taxes, but doing so requires having a social security number which illegal immigrants aren’t supposed to have. The IRS remedied this by created the individual taxpayer identification number. This well-intentioned remedy has backfired, however, and is costing taxpayers billions of dollars a year.