Even wages earned illegally in the U.S. are taxed. Individual Taxpayer Identification Numbers (ITINs) are available to people without Social Security numbers who cannot legally work in the U.S. so they can file tax returns. These ITINs have become increasingly linked to fraudulent tax claims, which helped inflate IRS payouts on the Additional Child Tax Credit from $924 million in 2005 to $4.2 billion, the report said.

The report attributed the massive outpouring of child tax credit refunds to recent expansions of the credit as part of the 2001 Bush tax cuts and the 2009 American Recovery and Reinvestment Act, the legislation that created the stimulus program.

“The IRS doesn’t seem to think its job is to make sure people who are claiming these credits are entitled to them. The children may or may not be living abroad--or even exist. It’s absurd, almost a joke,” said Ira Mehlman, a spokesman for the Federation for American Immigration Reform, a group which advocates securing U.S. borders. “The IRS scares the heck out of most Americans, so there’s no reason why they shouldn’t be just as vigilant against people in the country illegally….especially when the deficit is topping $1.5 trillion.”

However, some groups argue that as members of U.S. Society who contribute to the economy, undocumented workers have every right to claim tax benefits.

An April study by the Institute for Taxation and Economic Policy found that undocumented immigrants paid $11.2 billion in taxes in 2010. It estimated that nearly half of all illegal immigrants pay income taxes.

IRS Is Paying Illegal Immigrants Billions of Dollars