Mike Shedlock
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U.S. Rep. Sam Johnson, R-Texas, left, wants to end the practice of giving illegal immigrants tax credits for kids, but U.S. Sen. Harry Reid, D-Nev., won’t let the House-approved measure H.R. 556 through the Senate.

"The System is Working Fine" says Senator Harry Reid, even though the Joint Committee on Taxation calculates that enactment of H.R. 556 would save taxpayers $24.4 billion over the next decade.

The House of Representatives repeatedly has passed an IRS bill that could save U.S. taxpayers up to $24.4 billion over the next 10 years — but Harry Reid’s Democratic Senate will not hear it.

The Refundable Child Tax Credit Eligibility Verification Reform Act, or H.R. 556, would require tax filers to provide Social Security numbers to claim child tax credits.

Currently, the IRS allows undocumented residents to collect the $1,000 credits for dependents not even living in the country. Watchdog reported that illegal immigrants received $4.2 billion from the tax agency in just one year.

“My bill (targets) billions of dollars in waste, fraud and abuse. Instead of hitting up taxpayers for even more taxes, Washington needs to go after these billions of dollars,” said U.S. Rep. Sam Johnson, R-Texas.

Though the GOP-controlled House has passed Johnson’s measure three times, Senate Majority Leader Reid, D-Nev., refuses to allow the bill to come up for a vote in his chamber.

“The IRS has been doling out the credit to tax filers claiming children who do not even live in the country,” Johnson charged.

Tax preparers agree that the system is broken — and that the IRS must fix it. They say the agency has to stop disbursing ACTC refunds based on Individual Taxpayer Identification Numbers, which are available to undocumented residents.

Tax preparers told Watchdog they have seen clients from Guatemala, El Salvador, Honduras and Nicaragua claiming Mexican children as dependents.

A 2009 TIGTA audit concluded that the child tax credit “appears to provide an additional incentive for aliens to enter, reside, and work in the U.S. without authorization, which contradicts Federal law and policy to remove such incentives.”

Johnson’s bill would impose a 10-year ban on tax filers who commit fraud and a $500 penalty on tax preparers who knowingly bilk taxpayers through the ACTC program.

“I just think the child tax credit is working just fine, and there’s no need to punish children,” the Democratic leader told the Associated Press in February.
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Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.