Thanks to an Obama-era executive order on illegal immigration, up to five million illegals who received a Social Security Number can apply for federal tax refunds even if they never paid taxes.
These refunds are possible by way of the Earned Income Tax Credit (EITC), a faulty system that in 2013 was responsible for $5.8 billion in fraudulent refunds.
Like the Child Tax Credit (CTC), the EITC was initially designed as a subsidy to help working, low-income Americans. Both credits are “refundable,” meaning they are available even in cases where the individual still owes or does not pay federal income taxes.
When the CTC went into effect in 1998, parents were not required to have a valid SSN or even submit proof that their kids actually lived in the United States. In 2001, President GW Bush further expanded eligibility requirements for the CTC and increased the credit amount to $1,000 per child.
In 2006, roughly 796,000 individuals without SSNs received child tax credits totaling more than $920 million. By 2008, that total had increased to $2.1 billion.
In 2009, President Obama signed a stimulus package that further expanded eligibility requirements.
In 2010, the Treasury Department paid $4.2 billion in tax refunds to more than 2.3 million illegal workers. Parents received an average of $1,800 in CTC refunds. Those who retroactively claimed credits received as much as $10,000 each.
“While the total amount of payments to unauthorized workers is enormous, the trend lines are even more disturbing,” wrote Senator Claire McCaskill (D-MO) in 2011. “Wrongful payments of refundable tax credits should be easy to identify and stop. The law is clear that individuals who are not authorized to work in the United States are not entitled to public benefits.”
In November 2014, President Obama announced a series of executive orders that among other things allowed certain illegal immigrants to obtain SSNs. With SSNs, illegals were then able to claim EITC refunds. And because the IRS can audit for three years, the smartest illegals retroactively claimed the credit for three years.
It didn’t matter if they never paid taxes or never filed a return. They received the money anyway.
Author’s Note: Coming from a legal working US citizen who is forced to pay additional money to the government at the end of each tax year, this trend is deeply frustrating.
Handing free money to illegal immigrants just because they have children or just because they fall into a certain income bracket is more than unconstitutional, it’s unfair. The issue is particularly ironic for legal immigrants, whose taxpayer dollars will be used to issue refunds to illegal immigrants who aren’t paying taxes.
Even worse, the tax loophole is yet another incentive for more illegals to come to the United States.