The earned income tax credit (EITC) is a refundable tax credit for qualifying low-income taxpayers, in effect a transfer of wealth to them from higher income taxpayers, an anti-poverty program built into the Internal Revenue Code. The EITC was originally enacted in 1975, and has been expanded several times since so that some qualifying low-income taxpayers with children can today get EITC benefits in the form of tax refunds exceeding $5,000.
To qualify for the EITC, taxpayers must provide valid Social Security numbers for themselves and their children. This requirement disqualifies non-citizens who are working in the U.S. in violation of U.S. immigration law. Undocumented aliens cannot obtain valid Social Security numbers.
But a little-known ruling, by obscure officials of the Internal Revenue Service (IRS) in the last year of the Clinton administration, opened the door to illegal aliens claiming and receiving EITC benefits.
On June 9, 2000, a “Chief Counsel Advice” was published in the name of “Mary Oppenheimer, Acting Assistant Chief Counsel (Employee Benefits)”, though it was signed by “Mark Schwimmer, Senior Technician Reviewer”. This document advises IRS employees that illegal aliens who are disqualified from receiving the EITC can retroactively receive EITC benefits for years worked without a valid Social Security number if, after receiving a valid Social Security number, they file an amended return for the previous years worked.
Thus, illegal aliens who obtain legal work authorization, either by qualifying for a work visa or by dispensation granted by Congress or the immigration authorities, and who then obtain a valid Social Security number, can claim the EITC for previous years worked without a Social Security number as long as such claims are not barred by a statute of limitations, generally within three years.
The document does state that, “Chief Counsel Advice is not binding on Examination or Appeals and is not a final case determination. This document is not to be cited as precedent.” But if you are advising taxpayers described in this document, who previously worked illegally but now have work authorization, a published IRS document like this constitutes sufficient authority for filing an amended tax return to claim the EITC for the previous years.
On the other hand, if you are a taxpayer who objects to your taxes being used to subsidize EITC benefits for illegal aliens working in violation of U.S. immigration law, you should send this information to your U.S. Senators and Representative in Congress, and tell them this ruling is in clear conflict with both the language and the intent of the Internal Revenue Code that the EITC should not be paid to anyone working without a Social Security number.
Here is the document: http://www.irs.gov/pub/irs-wd/0028034.pdf