Ineligible ITIN holders claim millions in tax credits

People with Individual Taxpayer Identification Numbers are claiming millions of dollars in tax credits for which they’re not eligible, according to a new report.

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The report, released by the Treasury Inspector General for Tax Administration, found that for tax years 2023 and 2024, 45,386 returns claimed about $172 million in tax credits that ITIN holders were not eligible to receive, including $142.8 million in refundable tax credits such as the Earned Income Tax Credit.

The Protecting Americans from Tax Hikes Act (PATH Act) of 2015 requires TIGTA to conduct an audit of the ITIN Program every two years. For the report, TIGTA evaluated the efficiency and effectiveness of the program to ensure only individuals with a tax need were assigned an ITIN. The PATH Act also prohibits taxpayers from retroactively claiming certain credits for any year that the taxpayer, spouse or dependent lacks a valid ITIN issued on or before the due date of the return.

An ITIN is a nine-digit number issued by the IRS to individuals who have a federal tax need to have a Taxpayer Identification Number but aren’t eligible for a Social Security number, such as immigrants. However, individuals who can get an ITIN include but aren’t necessarily limited to foreign individuals who receive U.S. wages or dividends or sell U.S. property.

As of October 2025, the IRS has issued approximately 31 million ITINs since the program’s inception in 1996. The agency issued 469,888 ITINs in 2025. Individuals with an ITIN can claim and receive tax credits, depending on eligibility. ITINs expire after three years of consecutive nonuse. There were 5 million active ITINs as of last October.

The IRS has systemic processes to administer the ITIN program, but in some cases, ITIN holders have received tax credits even when they’re ineligible. 

TIGTA’s review found 294 tax returns claimed more than $637,000 in tax credits that were ineligible because the taxpayer or qualifying individual (such as a dependent) did not have a Social Security number. Of the $637,000 claimed, $303,000 was the refundable portion allowed by the IRS. 

In addition, 45,092 tax returns retroactively claimed about $171.7 million in tax credits. The IRS allowed $142.5 million for the refundable portions on 1,488 tax returns where taxpayers did not have an ITIN originally issued on or before the due date of the tax return, and on 43,604 tax returns where the taxpayers’ ITINs expired before the tax return due date. 

The IRS didn’t agree with TIGTA, however, that it erroneously allowed credits on the 43,604 tax returns that retroactively claimed credits after the expired ITINs were renewed. The agency noted that it followed guidance in Notice 2016-48 that says the issuance date of a renewed ITIN is the original ITIN issuance date, not the renewal date. 

TIGTA believes the guidance could have been clearer on this point. “The IRS could have protected $138.8 million in Processing Years 2023 and 2024 if guidance was more aligned with the PATH Act’s intent to prevent retroactive claims for credits,” said the report. 

The report noted the IRS is planning to modernize the processing of ITIN applications by allowing taxpayers to self-authenticate their documents and electronically submit their applications, but that’s contingent upon information technology resources and other priorities across the agency, which has been going through a series of budget and staffing cuts over the past year that have significantly reduced its technology modernization plans. 

TIGTA also found that since September 2019, the IRS has not completed any on-site compliance reviews of its certifying acceptance agents who help people in the application process and are authorized to authenticate identification documentation. The IRS indicated that these reviews were delayed due to a lack of resources and aren’t mandatory. 

TIGTA made six recommendations in the report, including reviewing and making corrections for the tax returns where the IRS allowed credits for ITIN holders who were ineligible, and updating guidance to consider the ITIN renewal date as the issuance date, when applicable. The IRS agreed with all of TIGTA’s recommendations.

Last year’s tax law reduced many tax breaks for non-citizens.

“We are implementing significant procedural and programming changes under the One Big Beautiful Bill Act of 2025, which provides more stringent requirements for taxpayers claiming certain credits,” wrote Kenneth Corbin, chief of the Taxpayer Services Division at the IRS, in response to the report. “Specifically, beginning in tax year 2025, when claiming the Child Tax Credit and Additional Child Tax Credit, taxpayers and their dependents must have a valid Social Security number, authorized for work, and issued before the due date of their return. The same SSN requirement will apply to American Opportunity Tax Credit beginning in tax year 2026. We remain committed to improving program integrity, ensuring compliance with statutory and regulatory requirements, and reducing taxpayer burden while maintaining effective oversight of ITIN processing.”