Taking Action Investigation: Ending The Tax Loophole For Illegal Immigrants

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Thursday night in a Taking Action Investigation, WHNT News 19 exposed a tax loophole that provides billions of dollars in tax credits to undocumented workers.  In many cases, these tax dollars are going to people who have never stepped foot in the United States.

Here's the way it works.  Illegal immigrants are able to file taxes with an ITIN - which stands for Individual Tax Identification Number.

It's issued by the IRS for those not eligible to receive a Social Security Number.  The next step for many Hispanic individuals is to claim the additional child tax credit.

That's where this big dollar issue begins.

"I have seen some situations where is some money is going to other countries," said 'Ruth', a whistle-blower we talked with in our Taking Action Investigation.

We call her 'Ruth' in the report, but her identity remains protected.  She says she has seen this tax abuse again and again within her Hispanic community.

"They look at taxes as a savings," Ruth said.

We're talking about illegal immigrants filing tax returns.  To be clear, that's supposed to be a good thing.  The IRS wants everyone to pay Uncle Sam, whether the person is a U.S. citizen or not.

Here's the bigger picture.  Illegal immigrants are claiming multiple dependents.  An audit report from the Treasury Inspector General for Tax Administration issued last July shows claims for the child tax credit by ITIN filers increased from $924 million in 2005 to $4.2 billion in 2010.

And yes, the IRS knows all about it.

"Legislation is the best way to do it.  Frankly, I think some of it could have been done by the IRS already," said U.S. Senator Jeff Sessions (R-Alabama).  "But if they are not going to do it, legislation can stop it and stop it immediately."
Sen. Sessions says since the IRS will not stop mailing checks, he has asked Congress to take action.

So is WHNT News 19.  As for our secret source?  She's sharing this message with the Hispanic community she lives among.

"To me it's stealing," said Ruth.  "That's the way it is."

Senator Sessions proposed reform legislation this week.  However, Sen. Harry Reid, Majority Leader, shot it down.