Undocumented workers cashing in on IRS tax refunds

Tax fraud costing the U.S. billions

WEST PALM BEACH, Fla. - If you earn money in this country, you have to pay taxes on it. Undocumented workers are no exception, which is why they also have to fill out Internal Revenue Service forms.

The way some are doing it is sometimes allows them to get back more money than you or me.

"This has been going on since the beginning of 2000," Anthony Marino, a former IRS worker told the Contact 5 Investigators. "We all knew it was happening.  Everybody, my boss, everyone knew it was happening."

Marino, a CPA and former IRS auditor, is talking about tens of thousands of dollars worth of tax refunds going to undocumented workers who used their government issued ID numbers to commit fraud.

"It starts with the additional child tax credit," Marino says. The tax credit  allows families of certain income levels to get money back for every child who lives with them and is under 17 years of age. "But, some undocumented workers are claiming nieces, nephews, and other family members who don't live with them...and don't even live in the United States."

Marino said it's easy to do and provided us with an example to show us just how easy it is. In one case an undocumented worker received a refund of $9,000. A refund he says was all based on lies.

The Treasury Inspector General for Tax Administration has been warning the IRS about these fraudulent claims for years. An audit, released by the agency last year, details how those not authorized to work in the U.S. received refundable tax credits, totaling $4.2 billion.

It's an issue, that has already prompted outrage from many U.S. taxpayers. And many, like Barbara, flooded our inbox with emails.

"This is ludicrous," Barbara told the Contact 5 Investigators. "I keep thinking $4.2 billion a year to illegal people." Barbara is a U.S. citizen, lives on a limited income and wants answers.

"It's just....so unfair," she said. "How has this been allowed to happen all this time?"

Florida Congressman Allen West says this is just one of the many things he would like to rectify. "I've been up there for 17 months and there's a whole heck of a lot of things...I would like to wave a magic wand for us to rectify but i think you have to have a willing partner."

West says the first step is to simplify the tax code, which is often criticized for being convoluted and complex.

"The most important thing to make sure we don't have all those little itsy bitsy loopholes and exemptions that people can use that really end up taking away from the American taxpayers what is meant to be rightfully theirs," he said.

This is a massive problem that Washington is only just beginning to discuss. But for those who have known about it for years, the question remains: can it ever be solved?

"Until they are able to, truthfully, hold the practitioner responsible and totally accountable, it will never end," Marino said. He points much of the blame on tax preparers who are letting this fraud occur.

The Contact 5 Investigators contacted the IRS for an interview. It declined our request but did send us this statement:

"Eligibility for the child tax credit and additional child tax credit does not depend on work authorization status or the type of taxpayer identification number used. Any suggestion that the IRS shouldn't be paying these credits under current law to qualified individuals who hold ITIN's is simply incorrect."

Information about how to contact your local lawmakers is below.

Investigative Producer Lynn Walsh contributed to this story.

Print this article Back to Top