WRAL Investigates

Lawmakers want to stop flow of tax refunds to illegal immigrants

Posted October 26, 2012

— Members of North Carolina's congressional delegation say they want to block a nationwide tax fraud scheme among suspected illegal immigrants.

WRAL Investigates has examined reports from the Treasury Inspector General for Tax Administration that address schemes using Individual Taxpayer Identification Numbers. People in the U.S. on work visas and illegal immigrants use ITINs to file their income tax returns.

Suspected illegal immigrants are using ITINs to obtain an estimated $4 billion a year in tax credits for children who don't live in America – or might not even exist – according to the Treasury Inspector General.

Investigators uncovered more than 1,000 tax returns linked to eight addresses in North Carolina last May, for example, where refunds totaled more than $5 million.

Two women, Candida Mayo Figueroa and Cathy Lee Cisneros, were arrested and charged with coordinating hundreds of bogus tax returns with fake names that flooded into a handful of mailboxes.

Cisneros also owned a tax preparation business in a strip mall. A search of that business and her home turned up more returns, dozens of uncashed U.S. Treasury checks, a FedEx box containing dozens of birth certificates of Mexican origin and a notary public stamp and signature stamp listing Cisneros as the notary, bringing the fraud case to more than $5 million.

Both women have pleaded not guilty but remain in jail on immigration detainers.

"It's outrageous and really unbelievable," 2nd District Congresswoman Renee Ellmers said.

WRAL Investigates found federal reports dating back more than a decade that warned the Internal Revenue Service about the problem. Yet, the IRS has done little to fix it.

More than a dozen years ago, auditors wrote that "providing illegal aliens with valid ITINs allows for certain tax advantages and increases the potential for fraud." Ten years later, they identified $1.8 billion in additional child tax credits to ITIN filers, noting those refunds went to "individuals with no tax liability."

Internal Revenue Service, IRS Senator, House member criticize IRS tax refund policy for illegal immigrants

The IRS defends its interpretation of the tax code, which states that illegal immigrants who pay no taxes are eligible for the tax credits. Officials say they plan to keep paying until Congress tells it to stop.

"I think one would question whether any common sense was used to distribute these refunds checks," U.S. Sen. Richard Burr said.

Burr is co-sponsoring a Senate bill that would force the IRS to do a better job of making sure people who apply for ITINs are who they say they are and would tighten up rules on children claimed as dependents.

"These are taxpayer dollars that aren't going to investments in the future of this country. They're going to people ... who don't qualify for them," he said.

The U.S. House may go a step further, with two pending bills that would force the IRS to stop paying the child tax credit altogether to people who have only a taxpayer ID. Ellmers, 3rd District Congressman Walter Jones, 7th District Congressman Mike McIntyre and 9th District Congresswoman Sue Myrick are all co-sponsors on the legislation.

"When you're considering eight and 10 nieces out of the country living in Mexico with no (U.S. ties), where those individuals are filing are receiving tax dollars, that is just completely unreasonable," Ellmers said.

Burr said Congress might hold hearings in the coming months in hopes of finally tackling years of tax fraud.

"It's not discouraging. It's embarrassing," he said of the government's tardy response to the issue.


This story is closed for comments.

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  • josephlawrence43 Oct 29, 2012

    wildpig777: How would you catagorize the "agenda" of Obama? As a roaring success or a complete and abject failure? Did Bush win Iraq? yes, he did. Has Obama won Afgahn? No he has not. Did Bush add $6 Trillion dollars to our national deficit in under 4 years? Yep--he did. Do you want to discuss the $860 Billion stimulus (70% of which went to foreign companies and to create foreign jobs): How many hundreds of millions of dollars has he wasted on his "green energy" policies? Oh yeah-=-Obama has truly acquitted himself notably.

  • Tarheel born Oct 29, 2012

    The IRS is like the J Edgar Hoover of the FBI...they feel like no one can touch their job "or else". Congress better get their behinds (can't use the real word needed) in gear OR be prepared to be voted out. Hey Elmers and Byrd "can you me now"?

  • Offshore Oct 29, 2012

    I'll try this again. Since this is run by the IRS, I feel very uneasy about them running Obamacare. Something is amiss, and the leaders are looking the other way. I like ykm's solution.

  • ykm Oct 29, 2012

    Remember this article so ya can tell the government types that continue to cry for more money where to go......................get it.

  • wildpig777 Oct 29, 2012

    ELMERS, you get a small pass because you have not been in there very long, but it you do not immediately start pushing for SECURING the borders and removing ALL ILLEGALS from the country, you need to leave Congress as well. -- whatelse

    if youre looking for elmers to help you're decreived-- she has been a 100% turncoat on the platform she ran on. she should be voted out of office immediately and consider your vote against her as a service of merit to the united states of america.

  • wildpig777 Oct 29, 2012

    do you now see the fallout from george bushs welcome to all illegals to enter america?

    he started 2 wars, mismanaged them, couldnt finish them and now lives in luxury-- a real model of CONSERVATISM HUH? note i did not touch on 200 other areas where he was an abject failure....

  • Kaitlyn Oct 29, 2012

    "Yet another example of the wasteful spending of the current administration 4 years is 4 years too much Who is minding the store?-"wilmalathrup

    Read the article again. This problem has been known to exist for over a dozen years. Which administration has been in power for 2/3 of that time? Could it be...the Republicans?

  • lisa4 Oct 29, 2012

    I agree Scubagirl.....if you don't pay income tax....then you don't get a refund!! JUST THAT SIMPLE!!!! Maybe those of us working & paying taxes need to find out how to buy ss#'s so we can claim dozens of children, brothers, sisters, etc!!!!

  • driverkid3 Oct 29, 2012

    If that had been any of us pulling this garbage, WE would already be in prison and the key would have been thrown away!

  • mustainemad Oct 29, 2012

    How about stopping ALL of the giveaways to ILLEGAL immigrants?!?! If we stop the free health care, welfare, education, and let them work without paying a dime in taxes (oh, that's right, they "pay taxes"), then maybe they will stay in their own country!!!