A bombshell report by
First, the law. In 1996, the U.S. Treasury introduced the Individual Tax Identification Number (ITIN), a nine-digit tax-processing number assigned by the IRS to individuals who are obligated to file a federal tax return, but lack or are ineligible for a Social Security Number (SSN), typically required to file taxes. Since tax law requires everyone who earns money in the United States to pay taxes–even those who are working here illegally–the ITIN was created to facilitate filing for illegals who can’t get an SSN. No doubt such a law was seen as pragmatic. If an illegal alien was willing to file a tax return, better to have a way for the individual to do it, than lose the revenue. In addition, an ITIN allows U.S. employers to meet withholding requirements.
Yet such a law is the epitome of political expediency. It is essentially an admission that law enforcement officials are powerless to stop illegals from entering the county and obtaining a job–and just as powerless when it comes to cracking down on the companies that hire them. Yet that is hardly the end of the expediency. While requirements for obtaining an ITIN ostensibly include submitting original, official documentation from one’s country of origin to the Austin, Texas, IRS processing center for validation, the IRS is allowing field offices to process the documents. The rationale? Applicants prefer having their documents returned after a brief interview, rather than risk losing them in the mail if they were forced to send them to Austin.
Yet Austin is where the IRS maintains a fraud unit whose document checking is reportedly rigorous. The genesis of the current scam is the fact that document checking becomes far less rigorous when the worker also decides to obtain ITINs for his children, nieces and nephews.
Why is this critical? Enter the Additional Child Tax Credit (ACTC) which is “a refundable credit that can be claimed by taxpayers who are ineligible to claim the full non-refundable child tax credit, because it exceeds their total tax liability. The additional child tax credit was created to reimburse taxpayers for the non-refundable portion of their child tax credit.” In other words, the more legal dependents one can claim, the greater the refund one will receive from the IRS. Legal dependent is defined as a child who has been present in the filer’s household for over half the year.
Enter the scam. “We’ve seen sometimes 10 or 12 dependents, most times nieces and nephews, on these tax forms,” the tax preparer-turned-whistleblower told WTHR News. He then showed the WTHR reporter some examples. “Here’s a return right here: we’ve got a $10,300 refund for nine nieces and nephews,” he said. “We’re getting an $11,000 refund on this tax return. There’s seven nieces and nephews,” he added, pointing to another set of documents. “I can bring out stacks and stacks. It’s just so easy it’s ridiculous.”
The reporter then visited an illegal alien who took part in the scam. He admitted his home was being used by four other “undocumented workers” who don’t live there. Combined they claimed 20 dependent children were living inside one trailer home in Indiana. Their combined tax refund? $29,608. The man also admitted that the 20 children were living in Mexico and had never lived in the house. The rationale behind he and the other men taking the ill-gotten gains? “If the opportunity is there and they can give it to them, why not take advantage of it,” he contended.
Unfortunately, he has a point. The same whistleblower reported dozens of cases of fraud to the IRS. “These were fraudulent, 100 percent fraudulent tax returns, but I got no response; absolutely none. We never heard a thing,” he said. “To me, it’s clear the IRS is letting this happen.” A Northern California IRS field-office worker who viewed the report echoed that sentiment. “The fraud has been going on for years,” he told WND. “Business as usual.”
The worker also explained the tax-preparer element of the deception, contending that Spanish language tax-preparers who educate their clients about how much more money they can get back if they increase the number of dependents on their tax forms are “the enablers and catalyst of this fraud.” They get their clients a greater return, which builds good will and repeat business, while taxpayers get soaked. Equally disturbing, word of mouth virtually guarantees even greater abuse next year. Abuse in which WTHR News’ purported whistleblower continues engage himself, and likely explains why he refused to allow himself to be identified on camera. Perhaps whistleblower/fraud facilitator would be a far more accurate description.