IRS Form 8812 scams may result in 2 million illegal aliens collecting >$4 Billion annually in refunds: http://www.commonsensejunction.com/?p=18667 "Illegals with ITINs can file returns using a common U.S. “home” address and include a Form 8812 — Additional Child Tax Credit — claiming any number of children living in their household even thought the children have never lived in the U.S. Because the filer is using an ITIN, the children aren’t required to have SSNs either. The amount of the credit from Form 8812 is treated as though it was withheld from the filer’s paycheck, so the IRS gleefully includes the fraudulent amount in the filer’s refund." Someone doesn't think that this is a big deal, apparently by pointing to other scams: http://www.forbes.com/sites/kellyph...ding-taxpayer-fraud-is-a-much-bigger-problem/ A billion here, and a billion there; pretty soon you're talking real money.
Unfortunately this specific type of tax fraud is just a drop in a vast ocean of tax fraud. There are a number of legal citizens that don't file taxes at all, hide their cash in offshore banks, claim dependents they don't have or deductibles that they are not eligible to claim, business owners that give themselves a $1 salary, but use the businesses bank accounts live off of, etc, etc.
That does not make me feel better. https://www.bigsoccer.com/community/threads/ubs-fraud-4-down-51-996-to-go.1136366/ Bad enough some legal taxpayers hide part of their income. However, some illegals appear to be claiming and receiving refunds greater than the income they actually report, far exceeding the income tax they actually paid. Another degree of magnitude.
It shouldn't, but it is what happens when you have a tax system that is largely based on the honesty of the people filing the taxes and the fear of a very, very small percentage of those people being audited and having the screws put to them. I'm going off memory here, but one of the main reasons why Greece is in the crap hole it is in is because a significant portion of their potential tax income is lost to tax fraud.
The IG has apparentlt proposed several remedies for the IRS, none of which have ben adopted. It would seem simple to flag every ITIN filing an 8812. I've seen "Income Tax Evasion" described as the national pastime of several European nations. I'm sure it's a world-wide problem.
Any egregious tax fraud rips us all off. And I wonder how much the IRS is missing from independent contractors who get paid in cash and don't report squat. I know several of them.
Unfortunately tax evasion is just like a hydra. Crush the ITIN problem and the people that were filing ITINs, would just find another way to evade taxes/get larger returns. It is a world-wide problem, but the depth of the problem is different by country. The US has relatively little tax evasion of 10%-20%, but I remember reading somewhere that Greece had 50%.
That's irrelevant to this thread. Jake, thanks for posting this. It's pretty small potatoes on a per person basis, but the gvt. should still fix the damn problem.
http://www.irs.gov/compliance/article/0,,id=180171,00.html This particular problem did not exist before this scam began. Stopping this will not lead to other, greater frauds, any more than stopping some other scam lead to this one. http://www.huffingtonpost.com/2012/05/07/global-tax-evaders_n_1497597.html http://www.financialtaskforce.org/2...-tax-evasion-threatens-to-undermine-the-euro/ "the UK’s shadow economy at 12.5% of GDP, much higher than the US rate of 8.6%. Greece and Italy both sit at 27%." http://www.taxresearch.org.uk/Blog/...3-1-trillion-a-year-more-than-5-of-world-gdp/
That's generally how scammers work though. Just because this scam was new doesn't mean the people that are abusing it weren't doing other scams. Prior to ITINs, they were using fake SSNs, real SSNs that they stole, etc. etc. ITINs might have made this particular type of easier, but it also resolved other issues related to people that don't have SSNs, but still have taxable incomes.
I don't mind too much. After all, these are the rich job creators that shouldn't pay any taxes at all.
Those dirty ********ing illegals. First they sneak into this country uninvited, then they cheat on their taxes. What's next? Shoplifting? Double Parking? Tearing tags off of mattresses? Have they no shame?
Actually, I have some experience in this field and it's not that simple. There are hundreds of thousands, if not millions of returns being filed with ITINS out there. The IRS doesn't have the funding, time, or human resources necessary that it would take to verify each individual case. Keep in mind that this is just one of the MANY scams that the IRS has to deal with. There are a few hundred million tax payers out there and probably less than 100K IRS employees. Of those 100K IRS employees you'll have telephone assistor's, revenue agents, revenue officers, clerks, face-to-face assistors, data entry people, IT people, managers, tax examiners, secretaries and a bunch of other job types each performing specific duties. At some point the IRS has to decide which fish it makes sense to fry.
He didn't say it wasn't a big deal. He said... Don’t get me wrong: I’m not suggesting that we give anyone a pass on tax fraud. Undocumented workers should be targeted as much as the next guy. But if we focus on buzz words like “loophole” (which it’s not) or pretend that this fraud is somehow much different than other fraud because of our prejudices about who is committing the fraud, it takes away from the much, much bigger problem of screening and enforcement. How about we collectively agree that tax fraud is bad and that it needs to stop? And how about we tell Congress to give IRS the resources to stop it? But the drama? The suggestion that bad behavior is somehow restricted to a certain group of people? That we can do without. It’s getting us nowhere. Giving tax inspectors more resources? Hey, let's not go crazy
At some point is does become about diminishing returns if you're talking about the cost of the IRS resources. At some point it comes down to the actual tax code itself and the ease with which it's exploited.
The article says that perhaps 2 million illegals are involved in this fraud. Flag those ITINs , with 8812s? Triage. Start with those that have the highest number of dependents claimed. Work down. With some scammers getting $10,000 plus per fraudulent return, don't tell me that the IRS doesn't have time to take a peek at these.
But it's on an internet website that also implies it's OK to murder someone if you're involved in a trade dispute and are a member of a trades union. Now I'm not an expert on the American legal system... y'know, not full time... not professional, anyway... but that doesn't sound quite right to me. Having said all that I agree that it shouldn't be THAT hard to make life hard for the people doing the scam, (although I wouldn't mind betting their estimate of the numbers involved is probably a gross exaggeration), regardless of where they come from. Of course, there's another way to solve this sort of problem. Don't give any credits unless they're proved beyond doubt, the assumption being that everyone is fiddling things.
An 8812 is for claiming the additional child tax credit. All that is required to claim that credit is you have a kid under a certain age with a valid taxpayer identification number and have no tax liability. The sort of people who you're going to have filing with ITINS (yip, illegals) are mostly going to have no tax liability (because they have non-refundable credits (ie child tax credit) to zero it out or they make almost nothing anyways) and a bunch of kids. I have no idea about that 2 million figure, but I don't think I'm going out on a limb when I say that illegals like to have children just as much as anyone else, so a high number of filiers are going to file Form 8812. I don't think it's a stretch to say that the people making up our immigrant populations (latin americans) tend to have larger families so with your proposal you are going to be flagging a butt-ton of returns.
Please, get a job with the IRS first and then come back and give your opinion. You have no idea about the internal procedures nor resources that the IRS devotes to making life hard for schemers. This 8812/ITIN fraud is just one of MANY types of fraud that the IRS deals with.
Can't say as I've thought about it much but, isn't tax at a basic rate deducted at source by the employer by default in the US? Surely isn't the real problem that payments are being made on the basis of a tax rebate rather than a benefit as in many other countries I believe, certainly the UK.
So saying that there might be another, better system to stop people fiddling tax implies I'm not entitled to ask questions or make suggestions about the way tax is collected in the US? Uh huh!... and I suggested it wasn't where, exactly? In fact I made that point myself. Maybe if you'd get your head out of your arse you'd see I'm in general agreement with the points you've made and, strange as it might seem, other countries have a tax system too. Yeah, I know... strange, eh?!
In the US we have the ability to claim certain number of dependents on our W2's and that number is what our tax withholding is based on. But, you don't need to be honest in that number because it is supposed to be rectified when you file your return.
I No, I was agreement with coming up with a better system. I take more issue with the ease that people who have no f'n clue about the intracacies of the workings of a tax system can say "oh well it shouldn't be that hard...".
Which, presumably, isn't being done or, if it is, the figures on it are no more reliable or need checking which takes time and resources. That's why I mentioned that in some other countries they work on the basis of a child benefit rather than a tax deduction. http://en.wikipedia.org/wiki/Child_benefit The point of that being that it has to be claimed specifically for the child which means providing complete details of him/her. Of course, as with ANY of these things, systems are open to abuse and fraud. It's just the way things are I'm afraid. We also have child tax credit in the UK, (together with working tax credit and some other stuff),... http://en.wikipedia.org/wiki/Child_tax_credit#United_Kingdom So the systems aren't that different in some respects but our systems are generally administered on the basis of 'Pay as you earn', i.e. the Inland Revenue, (IRS equivalent), provide the employer with a tax code they have to apply to all earnings. http://en.wikipedia.org/wiki/Pay_as_you_earn#United_Kingdom The other point is that, as I mentioned before, if the employer DOESN'T obtain a tax code for you HE HAS to deduct tax from ALL your earnings at source, i.e. BEFORE you get it, with absolutely NO reductions. I suppose the other point is that very few people in the UK do a tax return... http://en.wikipedia.org/wiki/Tax_return_(United_Kingdom) I've employed several hundred people over the years and I can count on the fingers of one hand the number of people who would have completed a tax return. Actually I've employed people in the US as well but that was some 30 years ago. I can't remember how it all worked. So you agree it should be possible to come up with a better system as long as I don't agree with you it's possible to come up with a better system. Well, I'm glad we've cleared that up. I thought for a minute we were in some sort of Kafkaesque world that made no sense Actually I have got quite a lot of experience of how a tax system works... just not YOUR tax system but, silly me.. there I was thinking this was a discussion board for people with different experiences and perspectives to examine stories and information provided when all the time it was for employees of the IRS.