The IRS is so mired in scandal that we risk overlooking some of the giant tax collector’s iffy transactions. Indeed, I am just realizing that the IRS gave $14 billion in refundable tax credits to illegals. This is particularly infuriating given that I had to dig into savings in April to send the IRS money I could have better used myself.

Terry Jeffrey writes:

Sen. Charles Schumer, D-N.Y., and Sen. Marco Rubio, R-Fla., both said the immigration bill they helped push through the Senate was designed to "bring people out of the shadows."

Yet, if illegal aliens are truly in the shadows, why has the Internal Revenue Service been able to find enough of them to pay them more than $14 billion in refundable tax credits?

The IRS has essentially granted illegal aliens amnesty for the purpose of taxes, Jeffrey notes. This was a bureaucratic decision. The Congress and the voters did not make this decision.

Furthermore, the IRS also refuses to provide information on illegals to other relevant federal agencies. The IRS accomplishes the neat trick of bureaucratic amnesty by issuing Individual Taxpayer Identification Numbers for people who are unable to obtain Social Security numbers.

Illegal aliens who owe taxes, despite living and working here illegally, use ITINs. The only other significant group to use ITINs is composed of people living outside the U.S. who are not U.S. citizens but who owe taxes here. It would be quite easy for the IRS to identify people who in all likelihood are illegals and notify INS. But it won’t.

The Inspector General of the IRS has raised the question of illegal “fraudulent refunds” for illegals who take advantage of tax loopholes for citizens. Jeffrey writes:

The IG's 2009 audit report examined six tax years — 2000, 2001, 2004, 2005, 2006 and 2007 — to see how much the IRS had paid out in ACTC money to people using ITINs who were "not authorized to work" in the United States.

In 2000, according to the IG, the IRS paid $62 million to 62,000 illegal aliens; in 2001, it paid $161 million to 203,000 illegal aliens; in 2004, it paid $778 million to 626,000 illegal aliens; in 2005, it paid $1.063 billion to 810,000 illegal aliens; in 2006, it paid $1.407 billion to 1,016,000 illegal aliens; and in 2007, it paid $1.777 billion to 1,220,000 illegal aliens.

"While the law also prohibits aliens residing without authorization in the U.S. from receiving most federal public benefits, IRS management's view is that the law does not provide sufficient legal authority for the IRS to disallow the ACTC [Additional Child Tax Credit] to ITIN filers.

 I suppose you could make the argument that illegals, if they are paying taxes, deserve the breaks of citizens. I don’t happen to buy that and feel that not giving them such breaks would be an impediment to remaining illegally in the country. But here is the question that I find really troubling: Should the IRS bureaucracy decide unilaterally to grant a form of amnesty?

Whatever you think about immigration, it is time to examine the vast powers of the IRS, with an eye to drastic tax reform.

Only by reforming and simplyfying the tax system can we reduce the overweening power of this agency.