Oftentimes the cost of illegal immigration can be invisible, not readily obvious on the front pages of the newspapers, but a report from the Treasury Inspector General for Tax Administration (TIGTA) for the Internal Revenue Service (IRS) shed light on a cost that ensnares more than a million Americans- identity theft. The IRS Inspector General also revealed that the most common perpetrators of identity theft are illegal immigrants looking to get a job using a social security number that belongs to an American or legal resident.
Two significant findings in the IG report involve employment-related identity theft and that most taxpayers only realize they are victims when they get an IRS letter of discrepancy, and a bigger bill, long after tax season.
TIGTA conducted the audit “to evaluate the IRS’s Automated Under-Reporter (AUR) processes to identify and assist victims of identity theft. In July 2011, TIGTA reported that the IRS was in a unique position to identify cases of employment-related identity theft. TIGTA recommended that the IRS implement procedures to timely alert taxpayers when it becomes aware that their identity was stolen. However, in this review, TIGTA determined that taxpayers are still not notified.”
A statement from the IRS said its February 2011 to December 2015 audit identified nearly 1.1 million taxpayers were victims of employment-related identity theft. The growing problem prompted the IRS to start a pilot program to warn taxpayers they were potential victims of identity theft. However, TIGTA’s review of the pilot program found its program failed to fix the identity theft issue.
The art of identity theft leaves millions of Americans in financial peril that requires countless hours of legwork to recover lost money and repair their credit scores.
TIGTA also reported that the IRS still hasn’t established an effective process to ensure that it promptly sends the notices to alert taxpayers that their SSA earnings don’t match the electronic paperwork and that they are on the hook for taxes they do not owe.
“Employment-related identity theft can cause a significant burden to taxpayers, including the incorrect computation of taxes based on income they did not earn,” said Russell George, the Treasury Inspector General for Tax Administration.
After the IRS studied the growing problem they recommended significant changes to its pilot program. TIGTA made four recommendations that the IRS partially agreed with and Uncle Sam said they would take corrective action for the 2017 tax season.
“The IRS tries to mark the files of the fraud victims when electronic filings are used. But the tax agency misses about half of the victims,” according to the Inspector General.
Further compounding the issue is the IRS’ issuance of 2.4 million Individual Taxpayer Identification Numbers per year. Illegal immigrants often file tax returns to get a refund, however the IRS found the W-2 forms submitted highlight the valid Social Security numbers illegally given to an employer as an authorization to work. Keep in mind that legal visa holders pay $420 per year for the right to lawfully work in America.
In another twist it appears that many immigration attorneys are successfully reducing the crimes that illegal immigrants are committing in an effort to keep them from deportation.
According to a Los Angeles Times story, lawyers for Romulo Avelica-Gonzalez, who was “detained by immigration officials after dropping off his daughter at school in Los Angeles.” The father was arrested for two decades-old misdemeanor convictions.
One of Avelica-Gonzalez’s attorneys, Steve Escovar, explained that his client was arrested for convictions for Driving Under the Influence (DUI) as well as receipt of stolen property. The attorney successfully pleaded to vacate Gonzalez’s receipt of stolen property by convincing a judge that his client obtained an auto registration tag not issued by the DMV because he could not legally obtain a driver’s license. This is another common form of identity theft. Even though legal residents in country would never get a similar break, the California judge settled Avelica-Gonzalez’s case as a registration violation to assist his appeal to avoid deportation.
As for his 2008 DUI case, another California judge settled the “matter” as a speeding exhibition. With DUI’s costing legal residents thousands of dollars and steep insurance rates for ten plus years, Mr. Gonzales reduction made him a lucky man.
Avelica-Gonzalez wrote a letter last week saying he deserves to stay with his family in America. “I wouldn’t be able to live without my family in another place.”
While most people can sympathize with a father/husband being separated from his family, that fact remains that everyday Americans and legal residents are arrested and taken to prison when they commit a crime.
According to another Treasury Inspector General report affecting taxpayers, the IG reports that each year the IRS also “pays billions of dollars in ‘child tax credits’ to illegal aliens. The child tax credit, provided by section 24 of the Internal Revenue Code, is a credit against a taxpayer’s federal income tax liability of $1,000 for each of the taxpayer’s children. The credit is reduced for taxpayers whose income exceeds a specified amount.”
The Personal Responsibility and Work Opportunity Act of 1996 (PRWOA) specifically states that illegal immigrants are “NOT (emphasis added) eligible for any Federal public benefits. It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits.”
The term Federal public benefit is defined broadly and includes “any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States.”
When legal beagles try to define what exactly the IRS regulation means, oftentimes beauty is in the eyes of the beholder. Nevertheless, it appears that the IRS has taken a “don’t ask, don’t tell” policy when it comes to ITINs and Earned Income Child Credit abuse.
In the meantime, as Congress prepares for another vacation, the US debt clock closes in on $20 trillion, leaving taxpayers with an un-payable tab.