Treasury, IRS Propose Rules To Protect Refundable Tax Credits From Abuse By Illegal Immigrants

WASHINGTON (dpa-AFX) - The Department of the Treasury and the Internal Revenue Service have issued proposed regulations to apply and clarify the federal law regarding the eligibility requirements for taxpayer-funded refundable individual income tax credits, to ensure that it is protected from abuse by illegal immigrants.

'Under President Trump, the days of illegal aliens collecting taxpayer-funded benefits are over. The federal law is clear, and Treasury is enforcing it,' said Treasury Secretary Scott Bessent. 'American taxpayers should not be forced to foot the bill for benefits going to those who are barred by law from receiving them. These proposed regulations end the abuse, protect the integrity of the tax system, and put Americans first.'

'Refundable tax credits, like the Earned Income Tax Credit (EITC), were enacted to help low-to-middle income American families and workers receive critical financial support,' said IRS Chief Executive Officer Frank J. Bisignano. 'Today's proposed regulations ensure that federally funded benefits are reserved for eligible taxpayers and protect the integrity of every taxpayer dollar.'

The proposed regulations apply the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, or PRWORA, to four individual income tax credits: the adoption tax credit, the child tax credit, the American opportunity tax credit, and the earned income tax credit.

To receive the refunded portion of an affected credit, the taxpayer must be a U.S. citizen, U.S. national, or qualified immigrant on the date the taxpayer files the federal income tax return first claiming the affected credit. Qualified immigrants include lawful permanent residents, asylees, refugees, and certain other groups defined or specified under PRWORA.

The taxpayer must declare on the tax return, under penalty of perjury, that the taxpayer is eligible to receive the refunded portion of the credit.

For a joint return, only one spouse must be a U.S. citizen, U.S. national, or qualified immigrant.

The Treasury has made it clear that the proposed regulations would apply to tax years ending on or after the date the regulations are published as final regulations.

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