"Recovery Rebate" for ITIN Taxpayers and their Families

Provide a State-funded Cash Rebate for Massachusetts Families
 who pay taxes with ITINs

Legislation 

House Bill 4726 and Senate Bill 2659, both pending in the Joint Committee on Revenue

The Problem: 

The economic recovery act that Congress recently passed provides a much-needed cash “recovery rebate” for most American taxpayers, but it excludes those families in which any family member lacks a Social Security Number. This exclusion harms mixed-status families, including families with U.S. citizen children, many of whom have filed tax returns using an ITIN (Individual Taxpayer Identification Number) rather than a Social Security Number. These families, many of whom are also ineligible for Unemployment Insurance, have filed tax returns using an ITIN have paid the same share of income taxes as those with Social Security Numbers and deserve the same assistance.  Moreover, “recovery rebates” to immigrant workers and entrepreneurs, including those without Social Security Numbers, would, like payments to other taxpayers, benefit the Massachusetts economy as a whole.

The Solution:

Provide a state-funded benefit to families in Massachusetts who are ITIN taxpayers.  This legislation directs the Department of Revenue to provide a cash rebate to Massachusetts residents who file state income tax returns using ITINs that is equivalent to the “recovery rebate” in the recently-enacted federal CARES act. The eligibility criteria for the credit and the amount of the credit (generally $2400 for joint filers, $1200 for individual filers and $500 per child) mirror the federal provisions. The legislation also adopts the method of electronic delivery in the federal law: the Department of Revenue will pay the rebate electronically for ITIN taxpayers who requested the Department to refund their tax returns by direct deposit in either of the last two years.  The rebate will be calculated and paid on the basis of the taxpayer’s 2019 return if the taxpayer has filed a 2019 return, and if not, the credit will be calculated and paid on the basis of the taxpayer’s 2018 return. The Department will inform taxpayers who did not request electronic refunds by first class mail and by website information about the availability and application process for receiving the rebate.

Cost

The Massachusetts Budget and Policy Center has estimated that there are approximately 57,000 persons in ITIN taxpayer households in Massachusetts and that the maximum cost of this benefit would be $58 million in foregone revenue to the state on a one-time basis. The Coronavirus Relief Fund, also part of the federal CARES act, provides states with funds to mitigate the damaging effects of Covid-19. A Treasury Department guidance has stated that states may use this Fund “to provide emergency financial assistance to individuals and families directly impacted by a loss of income due to the COVID-19 public health emergency.” 

Prepared by Massachusetts Law Reform Institute, June 9, 2020

Attachments: 

(1) MassBudget and Policy Center Analysis: Responding to Covid;

(2) Chart showing section-by-section description of State ITIN Tax Filer Proposal With Comparisons to Federal CARES Act “Recovery Rebate”

(3) Client stories

(4) Downloadable fact sheet on ITIN Tax Filer proposal (same content as this webpage)(5/11/2020)

(5) One-pager informational sheet regarding H. 5036 and S. 2659

(6) Boston Globe article on why ITIN filers and their families need financial support that these bills provide

(7) MassBudget report on undocumented workers and the struggles they're facing economically

Links:

(1) Senate Bill 2659 (Bill filed by Senator James Eldridge);

(2) House Docket 5036 (Bill filed by Rep. Christine Barber)

(3) Hispanics are almost twice as likely as whites to have lost their jobs amid pandemic, poll finds - Washington Post.

(4) A Former Farmworker on American Hypocrisy - NY Times Article, calling for the legalization of essential workers.

(5) Essential but Excluded - a report by Voices for Children about how immigrants are excluded from Covid-19 relief in New Mexico.