Massive tax fraud by undocumented workers in Indiana

[trof]

53. Viral 'Tax Loophole' Video is Misleading. (Forbes)

Earlier this month, a reader sent me an email with a link to a news clip from Channel 13 (WHTR in Indianapolis) with the title “13 Investigates: IRS tax loophole.” She wrote:
“I was wondering if it was true…seems a little far-fetched to me.”

checked it out and dismissed it as much ado about nothing.

But then I saw it on Twitter.

And I saw it on Facebook.

And I realized that the video had gone viral as taxpayer outrage mounted.

But folks are mad about the wrong thing.

This is not a loophole. It’s tax fraud. Those are two totally different things. And Channel 13 knows it.

A loophole is an ambiguity. There’s nothing ambiguous about what’s going on here: this kind of fraud simply isn’t allowable under the Tax Code. The credit that the report refers to is the Additional Tax Credit and it’s claimed on a federal form 8812 (form downloads as a pdf). The credit is for certain taxpayers who get less than the full amount of the child tax credit – it is not some kind of loophole for undocumented workers to use to beef up their refunds. The rules for qualifying children still apply and it’s very clear that the credit is restricted to those children who are classified as “a U.S. citizen, a U.S. national, or a U.S. resident alien.”

Nonresident aliens – meaning those living abroad like those cited in the news piece – don’t qualify. And the scenarios that were noted in the piece? Those instances are used as the example of what doesn’t count in the IRS Publication on child tax credits.

http://www.forbes.com/sites/kellyphillipserb/2012/05/15/viral-tax-loophole-video-is-misleading-taxpayer-fraud-is-a-much-bigger-problem/