The Internal Revenue Service (IRS) quietly changed regulations to allow more undocumented immigrants to keep their taxpayer status through a program that is rife with fraud and abuse, and to delay deactivation of immigrant taxpayer status until 2016.
The IRS now prevents peoples’ Individual Taxpayer Identification Number (ITIN) from automatically expiring after five years as previously mandated. Now immigrants can keep their ITIN so long as they pay taxes at least once in a five-year period. (RELATED: IRS Loophole For Illegals’ Children Costs Taxpayers Billions)
The ITIN program is primarily used by undocumented workers to follow the law and file income taxes in the United States. Reports came out during the IRS scandal linking ITIN fraud to billions in lost taxpayer dollars. The IRS was forced to reform the ITIN program at the start of 2013 – but this new regulation undoes that reform.
“The IRS will not deactivate an ITIN that has been used on at least one tax return in the past five years,” the IRS said in an explainer of the new policy. “To give all interested parties time to adjust and allow the IRS to reprogram its systems, the IRS will not begin deactivating ITINs until 2016…The new, more uniform policy applies to any ITIN, regardless of when it was issued.”
“Developed in consultation with taxpayers, their representatives and other stakeholders, the new policy replaces the existing one that went into effect on Jan. 1, 2013,” the IRS stated. “Under the old policy, announced in November 2012, ITINs issued after Jan. 1, 2013 would have automatically expired after five years, even if used properly and regularly by taxpayers.”
Republican Texas Rep. Sam Johnson grilled the acting commissioner of the IRS on ITIN fraud at a hearing as recent as June 27, 2013. (RELATED: How To Destroy A Hard Drive: IRS Edition)
“Last summer the IG issued a damning report in which it found that IRS management ‘discouraged’ IRS workers from ‘detecting fraudulent [ITIN] applications.’ The IG’s report led me to call on then-Commissioner Shulman to resign,” Johnson said to then-acting IRS commissioner Danny Werfel.
“On the screen, I’ve got figure 6 from the 2012 IG report showing most frequently used addresses for ITIN tax refunds. As you can see, nearly 24,000 tax refunds totaling $46.4 million were issued to the same address in Atlanta,” Johnson said. “Bottom-line these ITINs are costing taxpayers dearly because they can be used to fraudulently get tax refunds…Look at figure 3 on the screen. Over 1,000 ITINs were assigned to individuals using the same address in Atlanta. You agree that there’s still a problem?”
“Also the IG found that IRS workers handling ITIN applications ‘remain concerned’ that management will basically pressure them to rubberstamp applications instead of ensuring that ‘only qualified individuals receive an ITIN,’” Johnson pointed out.