Happy Tax Day, or should I say Happy Chump Day! At least that’s the way I felt after I learned about the abuse of a little known tax break called the Additional Child Tax Credit or ACTC. The ACTC is a refundable tax credit, which is to say the credit cuts your tax bill (not taxable income like a deduction), or if you don’t have a tax obligation, you get a check from the government.
The credit, according to Curtis Dubay, a fellow at the American Enterprise Institute, is simply, put, means-tested welfare and a way for the federal government to assist American working families living in poverty. Unfortunately, he says, it is being abused by illegal aliens because the IRS doesn’t require filers to have a Social Security number to get the credit. Instead, the filers can use an Individual Taxpayer Identification Number, which is not proof of citizenship.
Unfortunately, some $4.2 billion dollars is given to people claiming the credit who should not receive it, according to the Treasury Inspector General for Tax Administration, the oversight agency for the IRS which studied the issue extensively. The improper payments are about 25 percent of the total credits paid in a given year, and over the years, Congress has expanded the credit making it an even bigger lure for scofflaws. According to TIGTA, one gimmick used by filers hoping to score a big government check is making multiple claims for previous tax years. In 2010, for example, 238,000 ITIN filers submitted more than 608,000 tax returns, claiming more than $1 billion in credits or an average claim of $1,800. But 9,000 individuals claimed $10,000 or more.
In a report, TIGTA says the credit actually encourages illegal immigration. “The payment of federal funds through the tax benefit appears to provide an additional inventive for aliens to enter, reside and work in the United States without authorization which contradicts federal law.”
Congress has tried to change ACTC filing requirements to include a Social Security number, but the IRS has resisted those efforts. "How illegal aliens receive billions of dollars from the IRS"