ILLEGAL IRS DOES WHAT? YeAh! PAYS iLLeGAl aliENs To StAY!!! rEALLY

http://www.cis.org/paying-illeglas-to-stay


Paying Illegals to Stay
IRS Gives Out Billions Each Year

By David North October 2013

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IRS Gives Out Billions Each Year

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David North, a fellow at the Center for Immigration Studies, has been examining the interplay between the government's immigration and financial policies for decades.
[IRS]

To crib from Caesar, all immigration policy is divided into three parts: you can enforce the law and deport the illegals, you can ignore them (and there is a lot of that going around), or you can pay them to stay in this country.

Not even the White House is publicly advocating the third option, but recently the Treasury took exactly that approach, and sent $4.2 billion to families of illegal aliens, as CIS reported in blog at the time.1

Why and how this came to pass is an unusual story with a plethora of players — including two heroes — about how our government works and how faceless, midlevel decision-makers can, and do, shape our basic policies. And how the courts are, in effect, powerless to do anything about it.

This particular paying-the-illegals-to-stay pattern revolves around the Additional Child Tax Credit (ACTC), which is not so much a tax credit as it is an income-transfer program for low-income families, offering up to $1,000 per child to all resident families, including those of illegal aliens. The Treasury Department's Inspector General for Tax Administration estimated that $4.2 billion had been sent in ACTC checks to families of illegal aliens in a single tax season.

The story of this scandal involves these ingredients:

* A fuzzy-minded Congress;

* An almost casual policy decision by IRS to make these payments to illegals;

* A still lower-level decision by IRS that made it easy for applicants to submit phony documents to support applications for ACTCs;

* Other practices by IRS making it easy for illegals to get big refunds in this program;

* A remarkable journalistic intervention in Indianapolis that broke the story;

* A highly useful set of reports by a Treasury Department inspector general; and

* A half-hearted, needlessly narrow effort by IRS to clean up at least part of its act.

This is one of those perfect-storm situations, in which a whole series of factors come together to cause the problem, in this case shelling out billions to help illegal aliens stay in the United States.

ACTCs and ITINs. Here are the basics in the situation: There are two kinds of tax credits in the income tax system, the more common non-refundable credits (for many things like charitable contributions and mortgage interest payments) and refundable credits (for a short list of items). The former can only be used to lower the tax owed; but in the latter, if the credit is large enough the Treasury will send an income tax filer a check, even if no income tax was owed. Since 1997, ACTCs have been part of the system as refundable credits.

Usually, such as in the Earned Income Tax Credit (EITC) program, which also involves refundable credits, the filer and his or her dependents must have Social Security numbers (SSNs) to obtain a refundable credit; this is not the case with the ACTC program.

Since earned income is taxable whether or not the worker is legally in the country, the IRS had to create a system to identify individuals who had tax obligations even though they were not here legally. Hence the Individual Taxpayer Identification Number (ITIN). But the IRS also decreed that ITINs can be used to identify dependents when SSNs are not legally obtainable. (One must be a legal resident of the United States to get an SSN.)

It is the use of ITINs by illegal alien income tax filers for themselves and for their dependents in the ACTC program that caused the $4.2 billion in payments.

Underlying Policy Questions. Before we get into the facts of the case, it may be useful to think about a set of related policy questions, with those at the top of the list easier to answer than those further down. I have added my own suggested answers.

1. Should any illegal alien get ACTCs for non-existent children? Absolutely not.

2. Should any illegal alien living in the United States be given ACTC credits for children living overseas? Of course not, but from the population-explosion point of view, it is mildly better that they be somewhere other than the United States.

3. Should illegal alien parents in the United States be given ACTC credits for their illegal alien children living in the United States? No, it is hard on the kids, to be sure, but such payments would simply encourage illegal aliens to come to the United States and stay here.

4. Should any illegal alien parents in the United States be given ACTC credits for their U.S. citizen children, kids who do exist and whose U.S. birth can be documented? That's a tougher one, as long as we maintain birthright citizenship. Incidentally, such kids do qualify for SNAP benefits (aka food stamps), but should they also get AC TC, as they do now?

These four questions are separate and distinct from a more basic one: should any illegal alien get any of the tax breaks, including ACTC, that are appropriately available to citizen and resident taxpayers? Congress, as we are about to see, has been of little help on many of these issues, and of no help on the most basic of them: Should any illegal alien get these tax breaks?

A Fuzzy-Minded Congress. The first (quite preventable) problem in this complex area was created on Capitol Hill, but it is not the only difficulty, as we will see. Congress could have easily voted that ACTC benefits, just like EITC benefits, could be issued only to people with SSNs. It did not do so.

Meanwhile, in a different vote at a different time, Congress decided, generally, that no federal "grant or benefit" could be given to illegal aliens and it did not define either of those terms.

This was a provision in section 401 of the Clinton-era welfare act, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

So, are all those $1,000 ACTC checks "grants" or "benefits" under PRWORA? Congress left that decision up to the Executive Branch, more specifically to the IRS.

The IRS's Rather Casual Decision. You would think that if a federal agency were going to make a multi-billion dollar decision regarding an ambiguous piece of legislation, such as "should we give illegal aliens ACTC benefits?" It would do so in the usual, formal way. There would be a notice of the contemplated decision in the Federal Register, a request for comments, and later a formal publication of the ultimate decision.

However, according to a detailed, useful report by the Congressional Research Service (CRS) on the subject:2

There is no indication that the IRS considers any refundable tax credits to be subject to PRWORA Section 401. It does not appear the agency has issued any regulations, rulings, or other guidance on the issue. If the IRS were to permit unauthorized aliens to claim any refundable credit that does not include a statutory SSN requirement, as appears to be the case currently, then there is a serious question as to whether that position could be challenged in court.

Now CRS, an arm of the Library of Congress, is no restrictionist advocacy organization; if anything, its writers tend to be both very careful and pro-migration. So if such an entity wonders about this IRS decision then it is, indeed, a "serious question".

The CRS comment above related to the level of formality of the decision-making system; saying that the more formal the process, the more likely that a federal judge would be to give the agency deference regarding that decision. The CRS suggestion is that no such deference is due the IRS's informal decision in this matter.

As CRS points out, however, a judicial review of the decision seems unlikely because taxpayers, generally, do not have standing in the courts on such matters, and illegal aliens getting the benefits anyway have no cause to take the matter to court. So only the Executive or the Legislative Branch could reverse that decision, and neither seems to be so inclined.

What I find interesting in this case, and not discussed anywhere, is the sense that this multi-billion dollar decision to pay illegal aliens this credit seems to have been made at the mid-levels of the bureaucracy without any visible political input.

First, as the CRS notes, the decision does not seem to have risen to the level of even a policy memo, much less an entry in the Federal Register, both of which would have called for some high-level scrutiny. Secondly, though some on the right may disagree with me, the IRS is one of the agencies in the federal government that has the fewest political appointees, just the commissioner and one or two of his or her aides, and that's about it.3 My sense is that several years ago a couple of GS-15s decided that the 1996 welfare reform did not apply to the ACTC benefits for illegals, and the decision has stuck. MORE@LINK ABOVE