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Senate Budget Battle May Hit Undocumented Kids Hardest

<p>A congresswoman wants to end tax refunds for children illegally in the country that families use to make ends meet.</p>
Sen. Kelly Ayotte (R-NH) has introduced a bill that would limit the child tax credit to children who have social security numbers, which would impact undocumented families.
Sen. Kelly Ayotte (R-NH) has introduced a bill that would limit the child tax credit to children who have social security numbers, which would impact undocumented families.

For several of the years that she’s lived and worked in the U.S., Laura has counted on tax refunds for each of her two children, even though no one in the family is legally here.

Laura, 45, works part-time as a waitress and her husband works sporadically at a factory. She has two children, ages 14 and 19.

She and her husband regularly file taxes using their Individual Taxpayer Identification Number and have received refunds of up to $1,000 for each child, as allowed by law, she said.

It’s a tax refund that Sen. Kelly Ayotte, R-N.H. wants to end for children illegally in the country.

Ayotte has introduced a bill to withhold the child tax credit from children without Social Security numbers, something people illegally here aren’t supposed to have.

Ayotte said late Monday she would offer it as an amendment to a Democratic bill to restore some of the $6 billion in funding for military pensions that Congress agreed to cut by slowing down cost of living adjustments for working age military retirees. The cuts were included in a budget deal that Congress passed in December. That bill could be on the Senate floor as soon as Tuesday.

“It was absolutely wrong to single out our men and women in uniform,” Ayotte said in a statement when she introduced the bill late last month.

In 2011, an estimated 1.15 million children ages 18 and under were illegally in the U.S., according to the Washington, D.C.-based Migration Policy Institute.

Her proposal "is a good government measure that would end an egregious abuse of our tax code and save billions of dollars," Ayotte said in a statement Monday.

In early January, Ayotte proposed eliminating the child tax credit for all filers who did not have a Social Security number, essentially parents in the country illegally who claim the credit on behalf of their children. She wanted to use the revenue then to help pay for extending unemployment benefits and the pension cuts.

That proposal drew howls from Sen. Majority Leader Harry Reid, D-Nev., Sen. Bob Menendez, D-N.J. and Latino and immigration groups who said it would punish millions of U.S. citizen children. Ayotte dropped the U.S.-citizen children from her plan.

For Laura, the money has been a way to pay taxes she owes each year and some of her children’s school-related expenses.

“School, everything goes for school. Uniforms, books. I put everything for school,” said Laura, whose household income was about $24,000 last year.

Should the refunds disappear, “I’ll die. I’ll die,” Laura said.

That’s an exaggeration, she admitted, it would mean some changes. She’d probably have to find another job, she said. But she wondered if that would lead to child care expenses. What about her plans to use half of the refund to help her older child, who has a part-time job and graduates high school soon, with college costs, she asked.

“Everything is expensive and there is no money,” said Laura. “In this house we have two families. We share with my sister-in-law, who is single, and her two children.”

Rent is $1,500 a month for the three-bedroom home.

Sara Silva, owner and CEO of Oakland, Calif.-based Latino Taxes, said many of her clients depend on the credit. The families who come to her to file their taxes work in restaurants, construction or cleaning staffs.

Most are uneducated, many can't read, she said. She not only does their taxes, but also helps them understand eviction notices, school documents or explains the English-language solicitation texts that show up on their phones, free of charge, Silva said.

Their refund money often already is spent before it arrives.

"A lot of people come in (to apply for the child tax credit) because they already owe that money in rent. It's not like they are thinking they are going on vacation in Cancún," she said.

Ayotte has said the child tax credit is an egregious problem in the tax code and is used by filers who get refunds for children not living in the U.S or who don’t exist.

But Menendez said with tax fraud committed across the spectrum of the tax code, why go after just one area of the tax code, an area that benefits children?

“The whole purpose of the tax credit,” Menendez said in January, “is to be able to help a child realize their God-given potential and to give those resources to their parents to help them raise that child.”

Silva agreed fraud of the sort Ayotte raised occurs. But "if you have an injury on your arm, are you going to cut off your arm?" she asked.