By John D. McKinnon
WASHINGTON--The Internal Revenue Service on Monday confirmed it
would allow illegal immigrants benefiting from President Barack
Obama's recent executive action to file for tax refunds for prior
years, fueling an outcry from Republicans.
The IRS explanation came in a letter from Commissioner John
Koskinen to a veteran GOP lawmaker, Sen. Charles Grassley (R.,
Iowa). The letter confirmed and expanded on previous public
comments by agency officials. In response, Mr. Grassley vowed to
push legislation to overturn the policy.
The November executive action offers some four million illegal
immigrants who qualify the chance to apply for "deferred action,"
which gives a temporary reprieve from deportation and the ability
to apply for work permits.
Because of Mr. Obama's executive action and the IRS
interpretation, "these individuals will be eligible to claim
billions of dollars in tax benefits based on earnings from
unauthorized work in the United States," Mr. Grassley said. "The
tax code shouldn't reward those who broke our immigration laws," he
added.
Other Republican lawmakers have charged that the payments would
amount to an "amnesty bonus" under Mr. Obama's action.
The action allows many to obtain work permits and Social
Security numbers. Getting a Social Security number in turn will
allow those who qualify to apply for a tax break known as the
Earned Income Tax Credit, the IRS said. The credit provides cash
payments to lower-income households, even those that didn't earn
enough to pay income tax, and can be worth several thousand
dollars.
Eligible taxpayers could obtain the credit for as many as three
prior years under the IRS interpretation.
Mr. Koskinen's letter said the agency is merely following a
15-year-old opinion by the IRS Chief Counsel's office. That opinion
said that "a taxpayer may claim the Earned Income Tax Credit (EITC)
for a taxable year using a social security number (SSN) acquired in
a later taxable year," according to Mr. Koskinen's letter. After a
review, "we believe that the 2000 [opinion] is correct," the
commissioner added.
The agency didn't comment on Mr. Grassley's statement.
The issue has added to friction between the Obama administration
and GOP lawmakers over the immigration action, which is also the
issue at the heart of a stalemate over Homeland Security
funding.
Mr. Grassley said he would seek to write legislation overturning
the IRS interpretation.
Write to John D. McKinnon at john.mckinnon@wsj.com