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Tax loophole costs billions- guess who benefits

Published:

Last Edited: March 15, 2013, 12:28 am

Tax loophole costs billions

  • Millions of illegal immigrants are getting a bigger tax refund than you. Eyewitness News shows 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!

Note: See all follow-up stories here.

INDIANAPOLIS - Inside his central Indiana office, a longtime tax consultant sits at his desk, shaking his head in disbelief.

"There is not a doubt in my mind there's huge fraud taking place here," he said, slowly flipping through the pages of a tax return.

The tax preparer does not want you to know his name for fear of reprisal, but he does want you to know about a nationwide problem with a huge price tag.

He came to 13 Investigates to blow the whistle.

"We're talking about a multi-billion dollar fraud scheme here that's taking place and no one is talking about it," he said.

The scheme involves illegal immigrants -- illegal immigrants who are filing tax returns.

How it works

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.

While that may have seemed like a good idea, it's now backfiring in a big way.

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.

Continues:

http://www.wthr.com/story/17798210/tax-loophole-costs-billions

Entry #368

Comments

1.
sully16Comment by sully16 - March 15, 2013, 9:14 am
IaspIcbfohro. end rant
2.
emilygComment by emilyg - March 15, 2013, 1:08 pm
ty
3.
MADDOG10Comment by MADDOG10 - March 15, 2013, 6:09 pm
There's BHO's transparency for you...!
4.
rdgrnrComment by rdgrnr - March 16, 2013, 3:40 am
All part of the "fundamental change" he promised.

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