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Undocumented workers collect billions in tax credits

May 10, 2012 - Jim Anderson
Several readers have forwarded a report from an Indiana TV station that shows how undocumented workers are collecting child tax credits — fraudulently, in some cases.

A link to the story (in two parts) is available at right. (I’ve also attached a link to a blogger who casts doubt on the story’s importance, and a link to a CNN story by Charles Garcia that discusses the role of illegal immigrants in the U.S. economy.)

The Indianapolis reporter — Bob Segall — shares evidence of blatant tax fraud committed by illegal immigrants. What’s less clear is whether the prescribed solution in Part 2 — ending child tax credits for all workers who lack a Social Security number — is the best path.

A number of questions remain, most notably: Might better enforcement of existing guidelines be more appropriate? How about cracking down on tax preparers who help perpetuate the fraud?

It’s unfortunate that the IRS hasn’t been more forthcoming in sharing its perspective on the abuses that Segall cites.

I’m puzzled, too, by the anonymous “whistleblower” — a tax consultant who claims to be in possession of thousands of forms with seemingly fraudulent claims. Did he help file these claims? If so, at what point did he decide to come to Segall?

In the end, Segall's piece suggests a disturbing pattern of tax abuse. The remedy he explores, however, has a number of other consequences that should also not go ignored. According to an Associated Press report, the vast majority of children who would be affected are actually U.S. citizens.

Update: today (5-11) offers some background. A link is available at right.



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