Posted on 04/17/2009 11:46:05 AM PDT by freespirited
Abuse is rampant in the collection of fraudulent income tax refunds from the IRS, especially by illegal immigrants -- according to a new report to be released by the Social Contract Press on April 14.
The 51-page report, The Earned Income Tax Credit and Illegal Immigration: A Study in Fraud, Abuse, and Liberal Activism, by financial analyst and economist Edwin Rubenstein, will be released at a News Conference at 1 p.m. on Tuesday, April 14, 2009 at the National Press Club (529 14th St., NW, 13th floor) in Washington, D.C.
"The Earned Income Tax Credit (EITC) is the largest anti-poverty program in the United States -- and the most illegal-immigrant friendly," explains Edwin Rubenstein, author of the new report. "In 2007, more than 23 million households received more than $47 billion in the EITC payments -- and between one-quarter to one-third of all EITC claims were 'improperly paid' according to the General Accounting Office."
According to the report, much of the so-called "tax relief" goes to people who never paid a cent in taxes, and may have already defrauded the government of huge sums each year. "EITC scams are common, well-organized, and massive," Rubenstein writes in the report. EITC ranks second out of 57 government programs in fraudulent payments. Only Medicare reported a larger dollar amount.
Public policy expert, James R. Edwards, Jr., said "EITC has become yet another means of depriving hard-working Americans of their own resources. It robs some to give to others. This is exactly the kind of so-called 'tax relief' Obama talked about during the campaign and in his sales job for his economic stimulus bill. Obama is redistributing wealth via the tax code and misleading the public by calling it tax cuts. Rather it's welfare by other means," Mr. Edwards said.
The EITC is the most accessible of the major entitlement programs and used by more people than food stamps and welfare (TANF)* combined.
The complete report, The Earned Income Tax Credit and Illegal Immigration: A Study in Fraud, Abuse, and Liberal Activism, will be available at the Social Contract Press website, www.thesocialcontract.com.
Yes, SSNs are required for the dependents used to claim EITC. I have no idea what verification procedures, if any, the IRS uses. One false claim I know that was made often was to claim cousins or aunts or uncles as dependents. IIRC, those relations do not qualify as dependents for EITC, but the client would just put down a cousin and claim the cousin was a brother or sister.
Another fraud is for two unmarried filers who are living together, to both claim Head of Household, for which they must be living apart and supporting separate households, the entire year IIRC.
(I'm fairly confident my details are correct, but it's been four years since I did any tax work.) And I do think the IRS is turning a blind eye.
Are you sure about that? Schedule EIC (and Forms 1040 or 1040A to which it must be attached) is in English. If anyone has a link to those forms in Spanish, I'd like to see them.
The quickest way to get the IRS breathing down your neck is to claim the EITC. Filed correctly or incorrectly, your chances of having your return scrutinized increase by magnitudes. Something like 40% of EITC claims are reviewed/audited, as opposed to less than 1% of returns (the last time I saw the published numbers).
If they can’t speak english, I doubt they can read it. Who is aiding these criminals?’
All the tax prep companies.
Years ago, I was doing bookkeeping for a firm. The owner asked me to help his teen-age daughter who was working part time to fill out her return. He was claiming her as a dependent, and she also was doing so, because of the rules at the time, she could since she was a student.
He also wanted me to claim the EITC for her, and I refused. It led to a spat which never got fully resolved. About 3 months later, I dropped him as a client. He begged me to come back- I told him NO and I told him why not.
Gotta set some lines in the sand-—no matter what.
Way to go! Good story.
I saw them when I picked up my tax forms this year, but then again I am in Texas.
http://www.irs.gov/pub/irs-pdf/fw5sp.pdf appears to be the form I was looking at though. I might be mistaken on those particular forms being published in spanish. I will investigate further.
I have no idea what percentage of the fraud the IRS might catch, but many of the people who falsely file for EITC probably know the details most likely to get them caught. People would come in with their list of dependents and SSNs. Most might be aware enough to not claim a dependent whose SSN would appear on any other return. But claiming someone as a dependent who is not a dependent is what the defrauders must do to obtain maximum EITC.
I think some claims were 100% bogus (no legitimate dependents), and other claims were by people who did provide support for a cousin or friend who did not qualify them for EITC.
"Just fill out this form, put the number on the line, and wait for your check." The ramifications would never be discussed (according to the poor sop getting the notice).
Probably so, a lot involve that sort of thing. And some involve pure fraud, a taxpayer earned $20,000 or so, but if they can come up with a couple of "qualifying children" or dependents, then they can get back close to $5,000.
Of course, any taxpayer with low, qualifying earnings is eligible for some EIC as an individual. But they need a couple of dependents to get the big bucks. That's where some of them (who supported no one other than themselves) get very creative.
I'm no tax expert, but based on a column by Kevin Mooney (who attended the press conference) it appears that the answer is yes, a SSN is needed.
Apparently that's no problem, these folks know how to steal legitimate SSN numbers. Also, Mooney quotes someone from the news conference who said the IRS makes little or no effort to verify the legitimacy of the SSN on these claims.
Sounds like it's just another income redistribution scam.
My daughter has been fighting this with IRS, she has to prove he is theirs, yet they finally found his SS# card. Which was filed away for safe keeping don't you know that one?
I think they will be able to get something done about this soon. Will the other's be prosecuted?
Big surprise.
The Tax Cheat will remedy this.
Good for you, Thanks. I would be the same way.
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