Illegal Immigrants Get $4.2 Billion in Child Tax Credits in 2010

It appears illegal aliens are making it a habit to milk the federal government for child tax credits by filing fraudulent returns. Guesstimates range in the billions of dollars.

In a recent news report by the U.S. Treasury Department, it looks very much like illegal aliens are filing fraudulent child tax returns and receiving billions of dollars illegally. Figures show the amount handed out in 2010 by the Internal Revenue Service (IRS) was around the $4.2 billion mark. It goes without saying that this is money the economy desperately needs and begs the question of what is the government doing about this issue?

At the moment, it appears the matter is being glossed over and being held in abeyance until someone can come up with an idea to deal with the matter. Illegal aliens are using the additional child tax credit in a fraudulent manner, which was originally approved to hand out more money to taxpayers who could not claim a full tax credit for their children.

How is the system being abused? It is being abused because all wages earned, and that means even money earned illegally, is taxed. However, since illegal aliens are not able to get a valid social security number, the federal government has to track that income in some manner and collect their monies. They use what is referred to as individual taxpayer identification numbers that are given to taxpayers who cannot get a social security card.

A quick look at the figures being used by the Treasury Department show that illegal immigrants claimed $924 million in 2005 and that number has shot up to $4.2 billion in 2010. What is going on? The report points a finger at what they consider to be the problem; individual taxpayer identification numbers are handed out no matter what the applicant’s immigration status is because residents and non-residents may have a U.S. filing/reporting mandate under the IRS Code.

Generally speaking, the identification numbers are to report federal taxes – period. That means the IRS gives out the numbers to help individuals to comply with the tax laws and to account for taxes and payments for illegals who are not eligible for a social security number. The number does not allow a person to work in the U.S. or offer eligibility for Social Security benefits, but the IRS does handle claims for the additional child tax credit that those with identification numbers file.

The main problem with this setup is that the credit may be claimed even if a filer does not pay income tax, which means there is a lot of money going out for no good reason. In other words, this particular loophole has the potential to cost the federal government a lot of money that should be put towards achieving something for a nation that desperately needs to be pulled out of the downward economic spiral.

It is quite obvious that this inadvertent incentive for aliens to come and live and work in the U.S. without being authorized to so do flies directly in the face of both federal policy and law. Does one hand not know what the other one is doing? Or does the government wish to continue to hand out free money to illegal residents? More to the point, when are they going to stop giving out money to fraudsters?

Sally Odell – Rifkin & Fox-Isicoff, PA is an immigration lawyer in Miami with immigration law offices in Orlando and Miami, Florida. To learn more, visit

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