Tax loophole costs billions----PISSES ME OFF BIG TIME...
EXPOSED...ILLEGALS RECEIVING BILLIONS IN TAX REFUNDS

Millions of illegal immigrants are getting a bigger tax refund than you. Eyewitness News shows a massive tax loophole that provides billions of dollars in tax credits to undocumented workers and, in many cases, people who have never stepped foot in the United States. And you are paying for it! Part One of Two Part Series...

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INDIANAPOLIS - Inside his central Indiana office, a longtime tax consultant sits at his desk, shaking his head in disbelief.

"There is not a doubt in my mind there's huge fraud taking place here," he said, slowly flipping through the pages of a tax return.

The tax preparer does not want you to know his name for fear of reprisal, but he does want you to know about a nationwide problem with a huge price tag.

He came to 13 Investigates to blow the whistle.

"We're talking about a multi-billion dollar fraud scheme here that's taking place and no one is talking about it," he said.

The scheme involves illegal immigrants -- illegal immigrants who are filing tax returns.

How it works

The Internal Revenue Service says everyone who is employed in the United States – even those who are working here illegally – must report income and pay taxes. Of course, undocumented workers are not supposed to have a social security number. So for them to pay taxes, the IRS created what's called an ITIN, an individual taxpayer identification number. A 9-digit ITIN number issued by the IRS provides both resident and nonresident aliens with a unique identification number that allows them to file tax returns.

While that may have seemed like a good idea, it's now backfiring in a big way.

Each spring, at tax preparation offices all across the nation, many illegal immigrants are now eagerly filing tax returns to take advantage of a tax loophole, using their ITIN numbers to get huge refunds from the IRS.

The loophole is called the Additional Child Tax Credit. It's a fully-refundable credit of up to $1000 per child, and it's meant to help working families who have children living at home.  Note: This is part one in a two-part series. Read part two here. View Part Two
INDIANAPOLIS - Congressman Dan Burton (R – Ind) is frustrated – very frustrated – after learning the details of an Eyewitness News investigation.

"Why in the world are we doing this?" he asked. "Are you kidding me? The cost to the American tax payer is huge!"
The veteran lawmaker is responding to what 13 Investigates discovered all across Indiana: illegal immigrants getting big tax refunds from the Internal Revenue Service thanks to a loophole in federal law.
MORE: Tax loophole costs billions
The loophole allows undocumented workers to collect what's called an additional child tax credit. The credit – up to $1,000 per child – can be claimed even by families who pay nothing in taxes, in many cases resulting in a cash payment from the IRS. It is intended for working families with children who live in the same home.
But a local tax preparer came to Eyewitness News to blow the whistle on millions of people who, he believes, are taking advantage of the system. He says many illegal immigrants are claiming the tax credit for children who've never lived in this country, and he showed 13 Investigates dozens of redacted tax returns to prove his point.
"There is not a doubt in my mind there is huge fraud taking place here," said the whistleblower, who asked not to be identified for fear of reprisal. "I can bring out stacks and stacks. It's just so easy it's ridiculous."

Exposing the loophole

An undocumented worker in southern Indiana told 13 Investigates just how easy it truly is.
He said four other illegal immigrants file tax returns using his address, even though none of them actually lives there. And he said this year, those four workers filed tax returns claiming 20 children live inside his small trailer home. As a result, the IRS sent the illegal immigrants tax refunds totaling more than $29,000.
But none of the 20 children listed as dependents on the tax returns lives in Indiana – or even in the United States.
"No, they don't live here," admitted the undocumented worker, who lives with his young daughter. "The other kids are in their country of origin, which is Mexico."

The IRS granted tax credits for the 20 children anyway, even though the agency's own policy states they are not eligible. (Children are eligible for additional child tax credits only if they are US citizens or minor resident aliens who live in the US with a tax filer for more than half of a calendar year.)
According to WTHR's whistleblower, cases like this one are commonplace because the IRS does little to verify the eligibility of both the undocumented workers filing for additional child tax credits and the dependents listed on their tax returns.13 Investigates has confirmed it's a growing problem. It's nationwide. And it's out of control.Eyewitness News obtained US Treasury Department audit reports that show illegal immigrants now get additional child tax credits totaling $4.2 billion dollars each year. The department's Inspector General for Tax Administration has repeatedly warned the IRS that undocumented workers are abusing the additional child tax credit.