Lisa Rein, Washington Post, September 2, 2011
The Internal Revenue Service allowed undocumented workers to collect $4.2 billion in refundable tax credits last year, a new audit says, almost quadruple the sum five years ago.
Although undocumented workers are not eligible for federal benefits, the report released Thursday by the Treasury Inspector General for Tax Administration concludes that federal law is ambiguous on whether these workers qualify for a tax break based on earned income called the additional child tax credit.
Taxpayers can claim this credit to reduce what they owe in taxes, often getting refunds from the government. The vagueness of federal law may have contributed to the $4.2 billion in credits, the report said.
The IRS said it lacks the authority to disallow the claims.
Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, On Friday announced plans to examine the refunds.
“The disconcerting findings in this report demand immediate attention and action from Congress and the Obama Administration,” Hatch said in a statement.. “With our debt standing at over $14.5 trillion and counting, it’s outrageous that the IRS is handing out refundable tax credits . . . to those who aren’t even eligible to work in this country.”