Things That Make My Blood Boil

Will wonders never cease?

A member of the mainstream media -- WTHR, a local Indiana television station -- has actually performed some investigative journalism and uncovered "a massive tax loophole that provides billions of dollars in tax credits to undocumented workers and, in many cases, people who have never stepped foot in the United States. And you are paying for it!"

The Internal Revenue Service says everyone who is employed in the United States – even those who are working here illegally – must report income and pay taxes. Of course, undocumented workers are not supposed to have a social security number. So for them to pay taxes, the IRS created what's called an ITIN, an individual taxpayer identification number. A 9-digit ITIN number issued by the IRS provides both resident and nonresident aliens with a unique identification number that allows them to file tax returns.

Each spring, at tax preparation offices all across the nation, many illegal immigrants are now eagerly filing tax returns to take advantage of a tax loophole, using their ITIN numbers to get huge refunds from the IRS.

The loophole is called the Additional Child Tax Credit. It's a fully-refundable credit of up to $1000 per child, and it's meant to help working families who have children living at home. 

But 13 Investigates has found many undocumented workers are claiming the tax credit for kids who live in Mexico – lots of kids in Mexico.

Leaving aside for the moment the ludicrous logic that allows one federal agency to create an end-around for illegal immigrants to evade another federal agency, lets think about what the IRS is doing - or more accurately, failing to do.

In this era of Big Data and sophisticated analytics tools, it's relatively simple for organizations to analyze a mass of data -- like tax returns -- and pinpoint outliers or exceptions -- like people claiming 1 or 2 dependents one year, and 10 or 12 the next.

"The magnitude of the problem has grown exponentially," said Russell George, the United States Department of Treasury's Inspector General for Tax Administration (TIGTA).

And he says the IRS has known about the problem for years.

George has repeatedly warned the IRS that additional child tax credits are being abused by undocumented workers. In 2009, his office released an audit report that showed ITIN tax filers received about $1 billion in additional child tax credits. Last year, the inspector general released a new report showing the problem now costs American tax payers more than $4.2 billion.

That's $4 billion per year that comes out of the pockets of legitimate taxpayers like me and (hopefully) you.

Other information obtained from the TIGTA audits include: 

·  Claims for additional child tax credits by ITIN filers have skyrocketed during the past decade, from $161 million in 2001 to $4.2 billion in tax year 2010.

·  Undocumented workers filed 3.02 million tax returns in 2010. 72% of those returns (2.18 million) claimed the additional child tax credit.

·  In 2010, the IRS owed undocumented workers more in claimed additional child tax credits than it collected from those workers in taxes.

Read that last line again. I don't want to hear any more claptrap from illegal alien supporters who claim they are paying more in taxes than they get in benefits.

The IRS says it can't do anything to change the system without authorization from congress. This is a time-honored bureaucratic technique called 'passing the buck.' In the meantime, of course, U.S. taxpayers are passing the buck - plenty of bucks - to illegal aliens.

Lawmakers are predictably outraged, but also predictably have failed to take any action. Why should this problem be fixed when so many others aren't?

Kudos to WTHR.