Thursday, October 13, 2011
Plano State Rep. Sam Johnson proposes bill to close tax loophole
Illegal immigrants are currently allowed to claim Additional Child Tax Credit.
With the government attempting to find more than a trillion dollars in savings, a Plano representative says he has a simple solution: Stop giving billions to illegal immigrants.
Rep. Sam Johnson has introduced legislation that would prevent illegal immigrants from receiving the refundable portion of the Additional Child Tax Credit, a credit that can pay taxpayers up to $1,000 per child. Currently, a social security number is not required to obtain the credit, something Johnson's bill would address.
"With the dire need to cut government spending, I have a hunch that my common-sense proposal will get a serious look as way to stamp out waste, fraud and abuse," Johnson said. "If you think that illegal immigrants should not bamboozle taxpayers for billions of dollars every year by fraudulently claiming the child tax credit, then call the White House. Tell them that you support H.R. 1956 and that this should be a top priority for the administration."
In 2001, as part of the Bush tax cuts, the child tax credit was increased from $500 to $1,000. Unless the tax cuts are extended, that number will drop back down to $500 beginning Jan. 1, 2013. Another change will be that the refundable portion will only apply to taxpayers with three or more children.
The non-partisan Joint Committee on Taxation found that if Johnson's bill is enacted and the tax credit lapses back to $500, $9.6 billion will be saved over the next 10 years. If the credit is extended, as the Obama administration has proposed, $24 billion would be saved over the next 10 years by eliminating payments to illegal immigrants.
To receive the tax credit, taxpayers can use their SSN, or a nine-digit Individual Tax Identification Number that is typically assigned to illegal immigrants. Johnson said his legislation would disallow those with ITIN numbers from receiving the tax credit.
A report from the Treasury Inspector General from Tax Administration found that the availability of the tax credit may be encouraging people to enter the United States illegally.
"Although the law prohibits aliens residing without authorization in the United States from receiving most Federal public benefits, an increasing number of these individuals are filing tax returns claiming the Additional Child Tax Credit, a refundable tax credit intended for working families," the report read. "The payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, rise and work in the United States without authorization contradicts Federal law and policy to remove such incentives."
The inspector general's report said only 796,000 people with ITIN numbers applied for the credit in 2005, a number that has risen to more than 2.3 million in 2010.
The Internal Revenue Service has said current law doesn't allow them to disallow the child tax credit payment to filers with ITIN numbers, even though similar tax credits are disallowed. In 1996, Congress passed a law requiring a SSN in order to claim the Earned Income Tax Credit. The same law also prevents illegal aliens from receiving most Federal public benefits. H.R. 1956, as proposed by Johnson, would add the child tax credit to the list of tax credits not available without a SSN.
Johnson's bill has 20 co-sponsors, including Texas representatives Pete Sessions, Kenny Marchant, Bill Flores, Michael Conaway and Randy Neugebauer. The bill has not gained bipartisan support, as all 20 co-sponsors are Republicans.
A call seeking comment from Rep. Sander Levin, a Democrat and the ranking member of the tax writing House Ways and Means Committee, was not returned.
Pegasus News Content partner - Star Local News