The national response to WTHR investigative reporter Bob Segall's report has been huge. Hundreds of thousands of people have watched the video explaining how undocumented workers are taking advantage ofMore >>
WTHR exposed how confusion, fraud and IRS mismanagement result in billions of dollars in tax credits for illegal immigrants. 13 Investigates' Tax Loophole investigation has been watched by millions of people, and it's triggering debate and change in Washington.More >>
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13 Investigates is getting action after exposing a multi-billion dollar tax loophole. Members of Congress are debating the problem we first reported in April. It involves millions of undocumented workersMore >>
For the first time, House members debated whether to close a tax loophole that's providing big tax refunds to illegal immigrants.More >>
Saturday, May 18 2013 8:10 PM EDT2013-05-19 00:10:01 GMT
Ed Carpenter knew he was capable of another fast run, and it earned him the pole for the Indianapolis 500. The Indianapolis native bested IndyCar racing's big-name teams by claiming his first 500 poleMore >>
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Saturday, May 18 2013 7:14 PM EDT2013-05-18 23:14:03 GMT
A new interactive display that documents the lives and accomplishments of Indiana's politically prominent Bayh family has opened at Indiana State University. About 250 Indiana Democrats and others attendedMore >>
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Saturday, May 18 2013 7:05 PM EDT2013-05-18 23:05:05 GMT
A central Indiana official says the tough conditions opponents of a planned wind farm are seeking for the project would leave little room for the proposed power-generating wind turbines. The wind farm'sMore >>
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Saturday, May 18 2013 7:00 PM EDT2013-05-18 23:00:45 GMT
A Purdue University official says the school has made fast progress finding $40 million in savings or new revenue to support a two-year tuition freeze announced in March. Purdue treasurer Al Diaz tellsMore >>
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Saturday, May 18 2013 6:56 PM EDT2013-05-18 22:56:01 GMT
Statement from the Indiana Pacers: Over the last two days under the care of the Indiana Pacers' medical staff, George Hill has participated in each step of the NBA's Return-to-Participation Exertion ProtocolMore >>
Indiana Pacers guard George Hill has been cleared to play Saturday night against the New York Knicks in Game 6 of the Eastern Conference semifinal series. More >>
Saturday, May 18 2013 6:45 PM EDT2013-05-18 22:45:02 GMT
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Saturday, May 18 2013 6:23 PM EDT2013-05-18 22:23:35 GMT
A new federal report says inmates at the Marion County Jail in Indianapolis are more likely to be sexually abused by guards than inmates at any other jail in the nation. The Justice department reportMore >>
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Saturday, May 18 2013 4:56 PM EDT2013-05-18 20:56:07 GMT
Pole Day at the Indianapolis Motor Speedway meant a lot more than just racing. This was a family affair with a little bit of something for everyone for non-stop entertainment. The day's festivities startedMore >>
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Saturday, May 18 2013 4:03 PM EDT2013-05-18 20:03:11 GMT
It's less about the lemonade and more about the lesson. More than 20,000 local children got their first taste of the business world Saturday when they took part in Lemonade Day. The work behind JohnMore >>
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Saturday, May 18 2013 3:32 PM EDT2013-05-18 19:32:54 GMT
There could be bumping at Indianapolis this weekend. Schmidt Peterson Motorsports said Saturday afternoon that it has hired British driver Katherine Legge to drive the No. 81 car. That gives IndianapolisMore >>
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From Indiana to Capitol Hill, thousands of people are now weighing in on a WTHR investigation exposing a tax loophole worth billions for undocumented workers. But what, if anything, can be done about it?
INDIANAPOLIS - Congressman Dan Burton (R – Ind) is frustrated – very frustrated – after learning the details of an Eyewitness News investigation.
"Why in the world are we doing this?" he asked. "Are you kidding me? The cost to the American tax payer is huge!"
The veteran lawmaker is responding to what 13 Investigates discovered all across Indiana: illegal immigrants getting big tax refunds from the Internal Revenue Service thanks to a loophole in federal law.
The loophole allows undocumented workers to collect what's called an additional child tax credit. The credit – up to $1,000 per child – can be claimed even by families who pay nothing in taxes, in many cases resulting in a cash payment from the IRS. It is intended for working families with children who live in the same home.
But a local tax preparer came to Eyewitness News to blow the whistle on millions of people who, he believes, are taking advantage of the system. He says many illegal immigrants are claiming the tax credit for children who've never lived in this country, and he showed 13 Investigates dozens of redacted tax returns to prove his point.
"There is not a doubt in my mind there is huge fraud taking place here," said the whistleblower, who asked not to be identified for fear of reprisal. "I can bring out stacks and stacks. It's just so easy it's ridiculous."
Exposing the loophole
An undocumented worker in southern Indiana told 13 Investigates just how easy it truly is.
He said four other illegal immigrants file tax returns using his address, even though none of them actually lives there. And he said this year, those four workers filed tax returns claiming 20 children live inside his small trailer home. As a result, the IRS sent the illegal immigrants tax refunds totaling more than $29,000.
But none of the 20 children listed as dependents on the tax returns lives in Indiana – or even in the United States.
"No, they don't live here," admitted the undocumented worker, who lives with his young daughter. "The other kids are in their country of origin, which is Mexico."
The IRS granted tax credits for the 20 children anyway, even though the agency's own policy states they are not eligible. (Children are eligible for additional child tax credits only if they are US citizens or minor resident aliens who live in the US with a tax filer for more than half of a calendar year.)
According to WTHR's whistleblower, cases like this one are commonplace because the IRS does little to verify the eligibility of both the undocumented workers filing for additional child tax credits and the dependents listed on their tax returns.
13 Investigates has confirmed it's a growing problem. It's nationwide. And it's out of control.
"Millions of people are seeking this credit who, we believe, are not entitled to it," said inspector general Russell George. "We have made recommendations to [IRS] as to how they could address this and they have not taken sufficient action in our view to solve the problem. It's very troubling."
Why has the IRS done nothing?
Despite phone calls, emails, even a visit to IRS headquarters in Washington to get answers, no one at the IRS would meet with WTHR.
The agency instead sent 13 Investigates a short statement (see below) saying it is following the law, and current tax law does not prevent undocumented workers from getting additional child tax credits. The IRS claims it can't change that without a new law.
Rep. Burton and other lawmakers are now ready to act.
Lawmakers looking for a fix
"We've got to deal with it," he said. "I knew this was a problem, but until hearing what you found, I didn't know it was this severe."
Rep. Burton and dozens of other House Republicans have co-sponsored a bill that would essentially authorize additional child tax credits only for US citizens. House Resolution 1956 would require tax filers to provide a valid social security number to receive an additional child tax credit.
The IRS provides illegal immigrants with an ITIN (individual taxpayer identification number) so they can file tax returns, but most undocumented workers are not eligible to receive a social security number.
HR 1956 has sat idle in the House Ways and Means Committee for almost a year.
However, language from the bill is now included in a package of proposed budget savings measures that House lawmakers are expected to consider in May. While the budget package may have enough support to pass the House, it is expected to die a quick death in the Democratic-controlled Senate.
"This should not be a partisan issue because we're all concerned about saving taxpayer dollars and not wasting them on fraudulent things like this," said Rep. Burton. "But I don't think Democrats want to deal with this with right now."
Not all Democrats are opposed to limiting additional child tax credits to US citizens.
Last fall, Senator Claire McCaskill (D – Mo) sent a letter to IRS Commissioner Douglas Shulman asking him to stop the agency's payments of additional child tax credits to undocumented workers. "This is deeply problematic and must be remedied," the senator wrote.
But few other Democratic lawmakers have voiced support for eliminating the child tax credits for undocumented workers.
Republicans plan to keep pushing the issue forward.
"This rampant abuse of hardworking taxpayer dollars is just wrong," said Rep. Sam Johnson (R – Tex), who authored HR 1956. "It's time we close this tax loophole and put a stop to the child tax credit sham."
Rep. Burton agrees.
"I'm a taxpayer, and the thought of me paying for 24 people who are living in one trailer boggles my mind, especially when you tell me most of them are still living in Mexico. That's unconscionable." he said.
"Who's going to help?"
Many undocumented workers see the issue very differently.
"It's not taking advantage. I'm very thankful to this country for the help it gives me," said an illegal immigrant in central Indiana, who decided to talk with 13 Investigates as long as we agreed not to reveal his identity.
The worker has lived in the United States for 14 years. He owns a home in Indiana, pays taxes and is raising three children who are all honor roll students. This year, he received a $9,000 tax refund that includes additional child tax credits – not only for his children who live in Indiana, but also for four nieces and nephews in Mexico.
The tax credits help him care for his young family members south of the border, and he says attempts by Congress to revoke the credits could have dire consequences.
"Who's going to help them if they're not eligible ... to avoid them ending up in the drug mafia, begging in the street, being raped? What happens when they get sick?" he asked. "There's a lot of things that could happen to them if you don't help … When you come here [to the United States], to your family down there, you are their hope."
Taking additional child tax credits away from undocumented workers would also have an impact on millions of children legally living in this country. Children of illegal immigrants who are born in the US are legal US citizens and, in many cases, those children would no longer be eligible to receive the tax credits under proposals like HR 1956.
But the inspector general insists refundable tax credits were never intended for illegal immigrants – let alone people who've never stepped foot in the United States.
"It's being abused by people who are not entitled to use it, and that's problematic," George told Eyewitness News.
"It's cheating the American taxpayer," agreed Burton. "We all believe in humanity and humanitarianism, but we've got a $15 trillion national debt. We can't subsidize the whole world."
What can you do?
Congress may be voting on a budget measure in the coming weeks, and a budget reconciliation package now being considered in the House of Representatives contains language that would limit additional child tax credits to US citizens with a valid social security number. If you feel strongly about this issue – one way or another – now is a good time to let your lawmakers know. Their contact information is listed below:
Full statement to WTHR from the Internal Revenue Service:
The law has been clear for over a decade that eligibility for these credits does not depend on work authorization status or the type of taxpayer identification number used. Any suggestion that the IRS shouldn't be paying out these credits under current law to ITIN holders is simply incorrect. The IRS administers the law impartially and applies it as it is written. If the law were changed, the IRS would change its programs accordingly. The IRS disagrees with TIGTA's recommendation on requiring additional documentation to verify child credit claims. As TIGTA acknowledges in this report, the IRS does not currently have the legal authority to verify and disallow the Child Tax Credit and the Additional Child Tax Credit during return processing simply because of the lack of documentation. The IRS has procedures in place specifically for the evaluation of questionable credit claims early in the processing stream and prior to issuance of a refund. The IRS continues to work to refine and improve our processes.
Saturday, May 18 2013 10:40 AM EDT2013-05-18 14:40:00 GMT
Allison Jacob of Indianapolis who is a junior at Ball State University where she's majoring in Communications and Public Relations was named the 2013 500 Festival Queen on Saturday morning. She graduatedMore >>
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Saturday, May 18 2013 4:18 AM EDT2013-05-18 08:18:20 GMT
The winning numbers were drawn Friday night in the $190 million Mega Millions jackpot. The winning numbers were 11, 15, 35, 43, 49, with a MegaBall number of 41. Saturday night, numbers will be drawnMore >>
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Friday, May 17 2013 3:18 PM EDT2013-05-17 19:18:48 GMT
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Saturday, May 18 2013 9:14 AM EDT2013-05-18 13:14:33 GMT
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Saturday, May 18 2013 1:06 AM EDT2013-05-18 05:06:01 GMT
Visitors and employees of Indiana University Health will no longer be able to buy sugary drinks from cafeterias, vending machines and gift shops on hospital campuses. Indiana University Health implementedMore >>
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Saturday, May 18 2013 1:19 PM EDT2013-05-18 17:19:05 GMT
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Friday, May 17 2013 10:59 PM EDT2013-05-18 02:59:44 GMT
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