Should Unauthorized Immigrant Taxpayers be Denied Refunds for the Child Tax Credit? (H.R. 1041)

What is H.R. 1041?

(Updated August 26, 2021)

This bill — known as the SHUT Act — would deny the refundable portion of the child tax credit to individuals unless they include their Social Security number on their tax return or otherwise show that they’re authorized to work in the U.S. In effect, it would prevent unauthorized immigrants who file tax returns from getting a tax refund using the child tax credit, which is up to $1,000 for per child under age 17 depending on the income level of the parent(s) claiming the credit.

Additionally, this bill would prohibit Individual Taxpayer Identification Numbers (ITIN) from being issued by the Dept. of the Treasury unless the supporting documentary evidence is submitted to the Treasury. This effectively ends the certifying agent program, which allows individuals and entities to enter into an agreement with the IRS to assist people who don’t qualify for a Social Security Number but need an ITIN to file their tax return. The certified agent facilitates the application and authenticates the person’s identity before forwarding the forms to the IRS.

People filing tax returns using an ITIN are already barred from receiving Social Security benefits and the Earned Income Tax Credit, but no such prohibition exists for the child tax credit.

The bill's full title is the Stop Handouts to Unauthorized Taxpayers Act.

Argument in favor

Unauthorized immigrants shouldn’t be able to take advantage of any of the tax breaks available to lawful residents, including the child tax credit. That’s common sense.

Argument opposed

This bill would deny hardworking, taxpaying members of American communities a tax credit for their kid(s) because they don’t have legal status. That’s wrong.

Impact

Unauthorized immigrants claiming the child tax credit on their tax return; and the IRS.

Cost of H.R. 1041

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Rep. Gus Bilirakis (R-FL) also introduced this legislation during the last session of Congress to prevent unauthorized immigrants from getting federal tax refunds for the child tax credit, saying at the time:

“Effective immigration reform requires enforcing the borders and removing the incentives for illegal immigration. It is also vital we stop wasteful and fraudulent spending, to get our nation’s fiscal course back on track. The SHUT Act achieves both of these goals. [It] is a positive step to end this waste of taxpayer money, and ensure the refundable child tax credit is there for the people it is meant to help: low-income families.”

This legislation has the support of one cosponsor in the House, Rep. Walter Jones (R-NC).

Of Note: A 2011 report prepared by the Treasury Dept.’s Inspector General found that $4.2 billion in child tax credits in 2010 were paid out to individuals who aren’t authorized to work in the U.S.

Media:

• Sponsoring Rep. Gus Bilirakis (R-FL) Press Release (Previous Version)
  
• Sunshine State News (Previous Version)
  
• Tax Policy Center (Context)
  
• Treasury Inspector General Report (Context)