Undocumented workers got $4B tax credits

[alp227]

Undocumented workers received $4.2 billion from the Internal Revenue Service last year, according to a new study.

The report, released Thursday by the Treasury Inspector General for Tax Administration, showed that the IRS allowed people unauthorized to work in the United States to collect billions of dollars in refundable tax credits in 2010, The Washington Post reported.

Under current law, individuals not permitted to work in the U.S. do not receive most federal public benefits — but an increasing number are filing tax returns claiming the Additional Child Tax Credit, which is set up for working families. The IRS says the law as presently written is vague and does not permit them to disallow the claims.

“Clarification is needed on this issue,” TIGTA J. Russell George said in a press release. “The Internal Revenue Service should work with the Department of the Treasury to clarify whether this credit, which is based on earned income, should be paid to those who are not authorized to work in the United States.”

Read more: http://www.politico.com/news/stories/0911/62566.html

Most likely this is because those workers had kids born in the US who are citizens per the 14th amendment and Civil Rights Act of 1866. (Politico didn't mention this, and I think that the "illegal immigrants taking welfare" thing is a gross oversimplification that ignores the birthright citizenship issue.)

[orpupilofnature57]

1. How did their Employers make out ,or should I say Off with?

[hedgehog]

2. BINGO!

[gateley]

3. Yeah, those regs wouldn't be in place if the Republicans weren't

benefitting in some way.

[DURHAM D]

5. I don't understand your comment.

Please explain how an employer could benefit?

[hfojvt]

8. very easily

because the employer hires undocumented workers they can pay $1 or $2 or $3 less per hour and also not pay benefits. For every worker they hire at $2 an hour less, they make an extra $4,000 a year in profits for a full time worker. Not paying benefits saves $560 a year on 10 paid holidays (at minimum wage) and another $560 a year for two weeks of vacation/sick leave.

There's at least $5,000 per worker.

[DURHAM D]

9. In order for this to work the employer has to be running a cash business.

Please give me a list of those businesses likely to be running on a cash basis.

[hay rick]

12. hair and nail salons, landscaping companies,

car washes, restaurants, building contractors...

[DURHAM D]

15. Within the past decade a very large number of

landscapers and contractors have been audited by the IRS. They were targeted and paid dearly. I think to a lesser extent restaurants have been through the same experience but I think those were mostly handled by the state. Don't know about the other two you mentioned but can tell you that many business owners that used to try various tricks have stopped it altogether. It doesn't pay.

[hfojvt]

14. Why do they need to be running a cash business?

They simply offer a job with no benefits at minimum wage. The only people who apply for such a job are undocumented workers for whom this is a lot of money. If they didn't have that pool to hire from, they would be forced to pay more and offer benefits in order to get workers.

I also wonder if the state really audits employers to make sure they are paying minimum wage. If nobody complains, can they get away with paying less? And if people are undocumented, they won't dare complain.

[DURHAM D]

16. To start you need to be thinking about the revenue side of the equation.

[orpupilofnature57]

21. Any Service industry ,or vendor .

[hedgehog]

20. Every time someone takes a job for so little money that the rest of us

end up pitching in with a tax credit, we're in effect supporting the employer who is getting the labor at a lower rate.

In other words, raise the minimum wage so no one is eligible for a tax credit and the employers wil be paying a proper wage.

[hfojvt]

4. aren't there a number of undocumented workers

who have fake documentation?

Because they need fake SSNs in order to get jobs.

But then don't they pay taxes and also collect benefits under those fake SSNs?

[DURHAM D]

7. The SS administration just takes their funds and the matching funds of their employers.

The SS is aware of those numbers that are not good. I don't believe they (payers) will be able to collect benefits (SS & Medicare) later on those bad numbers. IOWs - illegal immigrants are contributing to the fund for the benefit of others.

[hfojvt]

11. but they should also be paying state and federal taxes

and then can collect refunds on those, large refunds if they have kids, they get several thousand in EIC, and they can collect unemployment as well, if they get laid off.

[DURHAM D]

13. You just changed the subject.

I was responding to your comment about benefits.

With regard to paying federal and state income taxes (if the state has income tax) the employer withholds the employees funds and deposits it with feds and the state each month. Many undocumented workers do not file tax returns so they do not use those deposited funds. I have no idea what the ratio of filers to non-filers is but many just leave their withheld income with the feds and state forever.

[hfojvt]

17. no, because unemployment compensation and the EIC are also benefits

I never said anything about social security. The word I used was "benefits". Thats's a general word, not one that just means "social security benefits".

[DURHAM D]

18. Given that it is a Politico article they left out an important part of the equation.

The undocumented workers may have received billions of dollars in income credits but in the aggregate they pay in many times that 4 billion each year that they (the group category) will never get back in benefits.

Are you certain they get unemployment benefits? Their bad SS numbers may prevent that.

[orpupilofnature57]

22. They're Victims ,and your right there is no way they get benefits.

[Booster]

6. Wasn't this some sort of agreement worked between Bush and

Fox? I also remember Bush saying that even undocumented workers who used false names could collect. Can you imagine how many are going to take advantage of that. Oh, wait. I'm mistaken - that was for social security not tax credits, although this may have been worked out at the same time.

[leveymg]

10. They've also paid in many multiples of that amount that will never be withdrawn

from the fund because undocumented were working under false SS numbers.

This is not a problem, from an accounts perspective, anyway.

[JNinWB]

19. Undocumented workers do not have valid SS #s.

If they give the employer a false number, all payroll info will be assigned to that number. Employers can check to make sure that the applicant and number they provide are accurate.

Also, the SS Adm occasionally contacts employers asking them to verify that the SS # and individual match. Some workers may be using the numbers of close relatives---cousins, uncles, brothers.