IRS Commissioner John Koskinen has told Congress that illegal immigrants who are granted amnesty under Obama’s amnesty program could claim back tax refunds – even if they’ve never filed any returns to begin with.
“To clarify my earlier comments on EITC, not only can an individual amend a prior year return to claim EITC, but an individual who did not file a prior year return may file a return and claim EITC (subject to refund limitations under section 6511 of the Internal Revenue Code),” Commissioner Koskinen said.
He insisted, however, that he doubts many illegal immigrants will take advantage of the loophole because they would have to be able to prove their earnings for those years they never filed returns.
“Filers would have to reconstruct earnings and other records for years when they were not able to work on the books,” he said.
Taxpayers must have Social Security numbers in order to claim the EITC, and illegal immigrants aren’t supposed to have numbers. But Mr. Obama’s new deportation amnesty grants illegal immigrants work permits, which are then used to obtain Social Security numbers.
IRS lawyers have ruled that once illegal immigrants get numbers, they can go back and refile for up to three previous years’ taxes and claim refunds even for time they were working illegally.
The lawyers said since the EITC is a refundable credit, that’s allowed even when the illegal immigrants worked off the books and never paid taxes in the first place.
“Section 32 of the Internal Revenue Code requires an SSN on the return, but a taxpayer claiming the EITC is not required to have an SSN before the close of the year for which the EITC is claimed,” Mr. Koskinen said. “At your request, the IRS has reviewed the relevant statutes and legislative history, and we believe that the 2000 Chief Counsel Advice (CCA) on this issue is correct.”
Mr. Koskinen had initially said illegal immigrants could claim refunds, but only for years they’d filed returns and presumably had paid some taxes.
Most of Mr. Obama’s amnesty is on hold after federal courts ruled he likely broke the law by acting on his own without Congress‘ approval and without putting his policy out for public review and comment.
But a 2012 policy that applies to so-called Dreamers, or young adult illegal immigrants brought to the U.S. as children, is in effect.
Homeland Security has approved 664,607 initial applications for Dreamers, and approved another 243,872 renewals over the last year, extending the initial two-year amnesty for another two years.