Earlier this year, the American Rescue Plan was signed into law, providing a one-year expansion of the Child Tax Credit (CTC). The newly expanded CTC will make the credit available to families with the lowest incomes for the first time, raise the benefits levels to $3,600 for children up to age six and $3,000 for children ages six to 17, and make it available to families via advanced monthly payments that will start as early as July 2021. If made permanent, the expanded CTC has the potential to advance racial equity and promote child and family well-being among communities who need it most, including immigrant communities.
Immigrant communities were one of the first and hardest hit by the COVID-19 pandemic, but many immigrant families were excluded from early relief measures. It was only in the latest round of stimulus payments that members of mixed immigration status families were made fully eligible for the support if they have Social Security numbers. Immigrants with Individual Taxpayer Identification Numbers (ITINs) continue to be denied the support they need.
Even when the economy is strong, many immigrants with ITINs are ineligible for most federal supports, such as the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and other public benefits. The Trump Administration furthered their exclusion with the 2017 Tax Cut and Jobs Act, which excluded immigrant children who lacked a Social Security number from CTC benefits for the first time.
All children who need support should be eligible for a child allowance. Restoring the CTC for the approximately 1 million children who do not have Social Security numbers, but are eligible for ITINs, would provide families with much-needed support, helping immigrant families cover the costs of basic needs such as health care, food, school supplies, and other necessities that support their children’s well-being and healthy development. It would also infuse states with spending and bolster local economies.
When permanently expanding the CTC to create a child allowance, Congress should restore access to the credit for immigrant children with tax identification numbers.
In addition to making the CTC inclusive of children with ITINs, we must ensure the process for obtaining an ITIN is simple and straightforward. Families have faced a number of barriers to getting an ITIN:
- Burdensome Paperwork. Families applying for an ITIN must present a completed tax return and a W-7 form for each applicant with proof of identity and foreign status. For children who are counted as dependents, this includes verification of their passport. If their passport does not have an entry date, they also need one of the following documents depending on their age: U.S. medical records, U.S. school records, or a document that shows the applicant’s name and U.S. address such as a utility bill, bank statement, or rental statement. Collecting and filling out these forms can be challenging for immigrant families with low incomes who have limited English proficiency. Additionally, the paperwork burden grew under the Protecting Americans from Tax Hikes (PATH) Act of 2015, which requires taxpayers to renew ITINs that have not been used on a federal tax return at least once in the last three consecutive years and those issued before 2013. To reduce the paperwork burden on families and the IRS, Congress should roll back the requirement that families regularly renew ITINs.
- Application Delays. Under regular circumstances, families often wait 8-10 weeks to have their application for ITINs processed, and these delays have grown due to disruptions from the COVID-19 pandemic. The National Taxpayer Advocate is reporting that at the end of March 2021, the IRS was taking 25 business days on average just to input a return into the system. Certain tax clinics are now reporting that applications are taking about 17 weeks to process. Delays in obtaining an ITIN coupled with the delays in having a paper return processed is leaving applicants waiting months to receive a tax refund or a tax identification number. In order to improve ITIN processing times, the National Taxpayer Advocate is recommending that the IRS allow applicants to apply for an ITIN throughout the year, so the applications do not all coincide with the busy tax-filing season.
- Logistical Hurdles. To apply for an ITIN, families need to have their identity documents verified in person or send the original documents by mail. To have their documents verified in person, they must make an appointment at an IRS Taxpayer Assistance Center (TAC) or a Certified Acceptance Agent (CAA). However, the number of CAAs and TACs are limited, and many TACs temporarily closed during the pandemic and CAAs were unable to have in-person meetings. Even under normal circumstances, TACs are mostly open during work hours, when parents or caregivers are most likely working and children are in school. As a result, many families are forced to send their original identity documents to the IRS in the mail, an action that can leave families in a vulnerable position, without their identity documents for weeks or months. The IRS says that it may take up to 60 days to get the documents back, but delays have lengthened during the pandemic due to processing and delivery delays from the IRS and U.S. Postal Service, and service providers are reporting that growing numbers of families have had their documents lost in the mail. In order for families to be able to safely verify their documents, the IRS should expand the number CAAs who can review families’ documents. In addition, to make the process as easy and straightforward for families, CAAs should be co-located with free tax preparation services such as Volunteer Income Tax Assistance (VITA) sites whenever possible, and CAAs should be able allowed to virtually verify families’ documents, so that an in-person meeting is not necessary.
Immigrant children and their families have been disproportionately harmed by the pandemic and systematically excluded from our system of social supports. As we work to strengthen our communities through the newly expanded CTC, we must ensure that immigrant children with ITINs are also given the support they need to grow healthy and strong.
 “Individual Taxpayer Identification Number (ITIN) Obstacles and Delays.” National Immigration Law Center, March 29, 2021.