We should be frustrated and disturbed by questions asked during a recent White House press conference. The issue was whether a deported woman was a threat:
Q I know you’re familiar with the case in Arizona of the mother, Guadalupe Garcia de Rayos. Is she a threat to this country?
MR. SPICER: I’m going to leave that up to ICE. We don’t get involved from the White House to particular cases. That’s not —
Q But she’s a symbol —
MR. SPICER: You’re right, and I understand.
Q But is she a threat to public safety, though?1
That depends on your definition of “safe.”
Public safety vs. removable threats
Someone can be a threat without endangering public safety. This deported Mexican national was one of many threats to a national identity system we depend on. We condemn the exploits of foreign hackers every day, but when it comes to identity fraud from illegal aliens we argue over the morality of punishment.
The media was aghast and politicians expressed outrage when Ms. de Rayos was removed. The exchange at the press conference confirms just how abnormal the rhetoric is. Are we OK with excusing identity fraud if the perpetrators are not a violent threat and only harm the security of our Social Security numbers? The reaction to de Rayos’ removal argues yes. In time, that answer will change for those who discover that someone else claimed their tax refund or took out credit cards in their name.
SSN theft, refund fraud: no safe haven for your identity
The Justice Department works hard to stop criminal impersonation and other kinds of identity theft. The agency details recent crackdowns on tax refund fraud. For example:
On January 20, 2017, Silvio Galvez, 30, of Miami, was arrested on a criminal complaint and is charged by indictment for his alleged involvement in a $50 million stolen identity refund fraud scheme involving the cashing of fraudulently obtained large-dollar tax refund checks.2
Refund fraud and SSN theft are old problems made worse by our ridiculously distorted views on fairness for immigrants. We tolerate illegal aliens working in the U.S., tell them they are essential because of the menial tasks they perform, guarantee them worker protections meant for citizens, and then complain when our identities are stolen.
It’s not as if government watchdogs don’t warn about risks from identity theft that range from fraud to terrorism. A GAO report going back to 2002 detailed an investigation at the Salt Lake City airport that led to 61 people being charged for misusing Social Security numbers:
In the May 2002 report, the SSA Inspector General noted that identity theft begins, in most cases, with the misuse of a SSN.3
That was fifteen years ago. We still don’t hear the message.
IRS attacks refund fraud. We pay the bill.
The IRS estimates that refund fraud from identity theft would have cost $14.59 billion in 2015 had the agency not halted $12.35 billion in phony payouts. $2.24 billion slipped through our fingers.4
In 2017 the Treasury Inspector General for Tax Administration warned:
However, the false reporting of wages and withholding continues to account for the largest amount ($1.3 billion) of undetected potentially fraudulent tax return refunds. With the passage of legislation to accelerate the reporting of Forms W-2, the IRS should be able to significantly reduce the number of these undetected returns.5
That’s good news. Give the government credit for making an effort, but it also gives illegals a mechanism to work illegally with a taxpayer ID number:
Resident aliens who apply for, or have applied for and received, an ITIN may be undocumented workers who are not legally employed in the United States. The Tax Code does not distinguish between legitimate and illegitimate employment. All income derived from all sources whatsoever, unless otherwise exempted, is reportable and taxable. This includes the earnings of undocumented workers regardless of potential violations of labor or immigration law.6
Does this make sense? Offering ITINs sends the wrong message. Luckily for those who don’t want to confront officialdom there is no shortage of identity factories and fraudulent SSNs.
Flawed values: a cause that hurts us
We are warned about refund fraud and identity theft. We hear about the tax gap and how much revenue is not collected. Every so often there is a showy prosecution of someone with too much money who cheated us out of a boatload of cash. Meanwhile, illegal immigrants keep working. Identity mills crank out their fake documents. Refund, employment, and other types of fraud persist. Government officials who want to crack down on the problem are criticized for being racist and xenophobic.
The argument that people who commit these crimes are not threats to public safety and deserve leniency should offend every taxpayer. During the press conference mentioned at the beginning of this post Sean Spicer said what we already know. Too many believe that the law shouldn’t apply to illegal immigrants:
If this was any other subject, if this was tax evasion and we said, well, they only really violated a little bit of — they only cheated on their taxes a little, you wouldn’t be saying hey, should they really be going to be prison or should they be getting a fine?7
That’s a good reason to worry and to wonder: how many versions of you are out there?
UPDATE April 9, 2017: had enough fraud yet?
If there is any doubt in your mind how outrageous the combined identity theft and refund fraud problem is, a new indictment from Missouri might change your thinking:
According to the indictment, Williams and others stole public school employees’ IDs from a payroll company and used them to electronically file more than 2000 fraudulent federal income tax returns seeking more than $12 million in refunds. He also allegedly stole several Electronic Filing Identification Numbers (EFINs) that he used to secure bank products allowing him to print refund checks and direct the Internal Revenue Service (IRS) to send refunds to prepaid debit cards.8
The kicker is that this man was deported in 1995. He came back to the U.S. The indictment also charges that he voted in the last two presidential elections.9
UPDATE May 5, 2018: refund fraud and tax reform
Small business profits from refund fraud, too
Tax season is over for 2018 and we just received some good news from the Department of Justice that another refund scammer is being locked up. A woman from Louisiana:
operated as a tax return preparer using several different business names. From 2008 to 2016, Washington conspired with others to prepare false tax returns using stolen identities. Members of the conspiracy stole the names and Social Security numbers of individuals who had been arrested or imprisoned, and then used that information to file fraudulent tax returns.10
While the DOJ fights to keep your money in your own bank account, the Treasury Inspector General for Tax Administration handed taxpayers some sobering numbers on Tax Day 2018. It’s painful to thank the IRS, but it’s amazing the agency catches anyone considering what it has on its plate: $3.4 trillion in taxes to collect, 246 million returns to process, $437 billion in refunds to send out, and 81,000 workers who try to get it right.12
Despite all this, the IRS stopped $8.2 billion in fraud using prisoner SSNs.13 By March 1, 2018 the agency had halted $7.3 million in fraudulent refunds.14
Bad IRS credits still sap billions
Improper IRS payments still sap billions in tax revenue. Inspector General testimony on Tax Day revealed that $24.9 billion in bad payments were sent out in 2017 including $7.4 billion15 thanks to the illegal immigrant-friendly Additional Child Tax Credit.
Despite the billions lost to fraud, we still heard a call late last year to dole out even more in Child Tax Credits. Linda Sanchez (D-CA) slammed tax reform and demanded more money for working families:
The amendment by Rep. Sánchez would expand the Child Tax Credit to provide a $3,600 credit for families with young children, index the credit for inflation, eliminate the $3,000 earnings threshold for the refundable portion of the credit, and make permanent the $300 “family flexibility” credit.16
Republicans beat Sanchez to the punch.
Republican tax reform raised the Child Tax Credit from $1,000 to $2,000 per child. Even better, it strengthened refund fraud protection by requiring applicants to have a valid SSN. As Republican Congressmen Luke Messer (R-IN) and Drew Ferguson (R-GA) point out, a 20-year old loophole from the Clinton-era 1997 Taxpayer Relief Act allowed an individual to claim the credit with only an ITIN number, which is issued regardless of immigration status. With tax reform that changed and only valid SSNs are accepted.
This is great news for taxpayers and bad news for people who game the system.
Here’s some more good news: our national unemployment rate is 3.9%. That should make those additional children a lot more affordable unless, of course, you aren’t eligible to be working.
1. “Press Briefing by Press Secretary Sean Spicer, 2/21/2017, #13.” The White House. February 21, 2017. https://www.whitehouse.gov/the-press-office/2017/02/21/press-briefing-press-secretary-sean-spicer-2212017-13, retrieved March 14, 2017.
2. “Over 100 Defendants Charged in Government Impersonation, Fraud, and Theft Schemes Involving Tens of Thousands of Stolen Personal Identities.” The United States Attorney’s Office. Southern District of Florida. January 31, 2017. https://www.justice.gov/usao-sdfl/pr/over-100-defendants-charged-government-impersonation-fraud-and-theft-schemes-involving, retrieved March 21, 2017.
3. “Identity Fraud. Prevalence and Links to Alien Illegal Activities.” United States General Accounting Office. June 25, 2002. p. 12.
4. “2016 Filing Season. IRS Improved Telephone Service but Needs to Better Assist Identity Theft Victims and Prevent Release of Fraudulent Refunds.” United States Government Accountability Office. March 8, 2017. pp. 1-2
5. “Efforts Continue to Result in Improved Identification of Fraudulent Tax Returns Involving Identity Theft; However Accuracy of Measures Needs Improvement.” Treasury Inspector General for Tax Administration. February 9, 2017. https://www.treasury.gov/tigta/press/press_tigta-2017-01.htm, retrieved March 14, 2017.
6. “Efforts Are Resulting in the Improved Identification of Fraudulent Tax Returns Involving Identity Theft.” Treasury Inspector General for Tax Administration. April 24, 2015. https://www.treasury.gov/tigta/auditreports/2015reports/201540026fr.html, retrieved March 14, 2017.
7. “Press Briefing by Press Secretary Sean Spicer, 2/21/2017, #13.” Op. cit.
8. “Missouri Man Indicted for $12 Million Tax Refund Fraud, Voter Fraud, Illegal Reentry and Felon in Possession of Firearm.” The United States Department of Justice. March 29, 2017. https://www.justice.gov/opa/pr/missouri-man-indicted-12-million-tax-refund-fraud-voter-fraud-illegal-reentry-and-felon, retrieved April 9, 2017.
10. “Louisiana Tax Return Preparer Sentenced to Jail for Stolen Identity Tax Refund Fraud.” Department of Justice. Office of Public Affairs. May 2, 2018. https://www.justice.gov/opa/pr/louisiana-tax-return-preparer-sentenced-jail-stolen-identity-tax-refund-fraud, retrieved May 4, 2018.
12. “Continued Oversight of the Internal Revenue Service.” Testimony of The Honorable J. Russell George, Treasury Inspector General for Tax Administration. Joint Hearing Before the Committee on Oversight and Government Reform, Subcommittee on Health Care, Benefits and Administrative Rules and Subcommittee on Government Operations U.S. House of Representatives. April 17, 2018. p. 1. https://www.treasury.gov/tigta/congress/congress_04172018.pdf, retrieved May 4, 2018.
13. Ibid., p. 11.
14. Ibid., p. 9.
16. “Linda Sanchez Introduces Amendment to Restore and Expand Child Tax Credit.” Linda Sanchez. November 7, 2017. https://lindasanchez.house.gov/media-center/press-releases/linda-s-nchez-introduces-amendment-restore-and-expand-child-tax-credit, retrieved May 5, 2018.
17. “Rep. Messer Pushes to Eliminate Tax Credits for Illegal Immigrants.” Luke Messer. October 4, 2017. https://messer.house.gov/news/documentsingle.aspx?DocumentID=647, retrieved May 5, 2018.
Photos: “TOP STORY: ICE HIS investigation uncovers Florida document fraud operation.” U.S. Immigration and Customs Enforcement. July 21, 2011. https://www.ice.gov/news/releases/top-story-ice-hsi-investigation-uncovers-florida-document-fraud-operation, retrieved March 21, 2017.