House lawmakers debate tax loophole question

Rep. Paul Ryan (R-WI)

More than three million people have watched WTHR's "Tax Loophole" investigation online within the past week, and many lawmakers are among them. Thursday in Washington, members of Congress debated the problem exposed by 13 Investigates.

Thursday was business as usual on the floor of the U.S. House of Representatives.

Democrats and Republicans spent hours arguing and criticizing one another as they debated a controversial package of spending cuts known as House Resolution 5652.

But Thursday was also different. For the first time, House members debated whether to close a tax loophole that's providing big tax refunds to illegal immigrants. It's something Congressman Sam Johnson (R – TX) has been wanting to do for years.

"Due to a loophole in the tax code, the IRS is shoveling out billions on American tax dollars to those who are here illegally," said Rep. Johnson.

Bolstered by an Eyewitness News investigation, Rep. Johnson and other Republicans made their case for closing the loophole that is now making national news.

Two weeks ago, 13 Investigates showed how millions of illegal immigrants are taking advantage of tax credits intended for working families with children. WTHR's investigation documented how many undocumented workers file tax returns using an ITIN (individual taxpayer identification number) to claim thousands of dollars in Additional Child Tax Credits.

IRS tax code currently allows illegal immigrants to claim the fully-refundable tax credits as long as the children listed as dependents live in the United States and with the tax filer for at least six months of the year. Eyewitness News showed many undocumented workers are cheating the system by instead claiming nieces and nephews who live in other countries. The IRS issues them tax credits anyway because the agency does little to verify ITIN documentation.

According to an audit report by the U.S. Treasury Department's Inspector General for Tax Administration, the problem now costs American taxpayers $4.2 billion per year. The inspector general has been warning the IRS and Congress about the abuse since 2009, but most members of Congress seemed unaware of the problem – until now.

"This is where our taxpayer money is going, to the [additional] child tax credit," said Rep. Paul Ryan (R-WI) Thursday morning during Congressional debate. "One investigation in Indiana said illegal immigrants in Indiana are getting $29,608 for 20 children they claimed for the tax credit who live in Mexico and have never visited the United States before!"

Rep. Ryan, chairman of the House Budget Committee, wants tax credits for illegal immigrants stopped, and so do many other lawmakers who saw WTHR's investigation. They debated it Thursday morning on the floor of the House after being bombarded by phone calls and e-mails from constituents who watched the Eyewitness News report online.

Some lawmakers, like Rep. Rick Mulvaney (R-SC), spent all of their allotted floor time to discuss the loophole.

"We got dozens [of e-mails] this week about a program where supposedly it was part of an investigative report by a television station in the Midwest that said that supposedly illegal immigrants were able to file paperwork every April 15 and receive $1000 back from the federal government for every child that they had, regardless of whether they could prove the child existed, regardless of whether the child actually lived in this country," Rep. Mulvaney said. "I was stunned by it to be quite frank with you and I gave it to my staff to actually research it, and it turns out, Mr. Speaker, stunningly it's absolutely true. Absolutely true. And it's not just a … television station in the Midwest or me, it's the IRS [that] admits this is true. The IRS inspector general looked into this and said we are spending $4 [billion] dollars every single year … on these types of programs. They admit that it's true and the IRS has asked us to act and we've done nothing. This is an outrage, Mr. Speaker. I'm surprised to hear anybody defend this system. This is the type of waste, fraud and abuse that undermines confidence in the way we do business in this town. This is the type of thing that gives people concern that we don't have any idea what we're doing about anything… We don't have to wait to fix this type of abuse."

Rep. Johnson took the opportunity to share his concerns, too.

"Illegal immigrants are even filing tax returns claiming children who do not live in America, according to a recent report by NBC Indianapolis WTHR," Rep. Johnson reported to his Congressional colleagues. "Mr. Speaker, there really shouldn't be any controversy over this. The American people are speaking out against this. The treasury and tax IG has spoken out against this. Democratic Senator Claire McCaskill has spoken out against this. Even the administration supports the idea of preventing illegal [immigrants] getting public benefits through funding of a verification program… Americans want, need and deserve better protection of their hard earned money and we owe it to the United States of America to take action today."

House Democrats argued against placing limits on the Additional Child Tax Credit. "I'm in opposition to an unfair proposal that would alter the child tax credit to exclude children of hard-working immigrant families," said Budget Committee Ranking Member Chris Van Hollen (D-MD).

Democrats unanimously spoke against HR 5652, which contains billions of dollars in proposed cuts to Medicaid funding, food stamps and other social programs.

"This is an unbalanced package of cuts that hurts the most vulnerable populations of our society and the working middle class," said Rep. Henry Waxman (D-CA).

Ultimately, Democrats lacked the votes needed to defeat the measure.

Along strict party lines, House lawmakers approved the budget reconciliation package, including language that would take away Additional Child Tax Credits from those who do not have a social security. That would essentially eliminate the ability of millions of undocumented workers to receive Additional Child Tax Credits.

But the measure is predicted to die a certain death in the Democrat-controlled Senate.

"That bill is not going to go anywhere in this Congress," said Eyewitness News political analyst Robin Winston.

Winston believes the budget reconciliation package now headed to the Senate is filled with too many controversial budget cuts to survive, and he thinks Congress is unlikely to pass a separate bill dealing with tax credits for illegal immigrants during an election year.

"There are huge constituencies with Latino-Hispanic voters, and some of those are in areas with contested House seats in battleground states," said Winston. "This is an issue that should be dealt with, but it would take some Democrats and some Republicans going into a room and saying ‘This isn't about immigration reform. This is about fairness to American taxpayers,' and everyone putting their ego in a drawer and deciding to work together to move this out [of Congress]," Winston said. "Until that happens, everyone draws a line in the sand and doesn't move on either side."

If you want to contact your lawmakers about this issue, you'll find their contact information below.

US Representatives – Indiana








Visclosky, Peter



  202-225-2461  202-225-2461



Donnelly, Joe



  202-225-3915  202-225-3915



Stutzman, Marlin






Rokita, Todd






Burton, Dan






Pence, Mike






Carson, André






Bucshon, Larry






Young, Todd



 202-225-5315  202-225-5315
























 US Senate – Indiana

Daniel Coats (R)
493 Russell Senate Office Building
Washington, DC  20510
(202) 224-5623

Richard Lugar (R)
306 Hart Senate Office Building
Washington, DC 20510

US Representatives
– All states

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US Senate – All States

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