The Struggle to Access the CTC

Posted: wapo.st/3kMoBbQ

By: Kyle Swenson, Washington Post on October 23, 2021 at 4:22 p.m. EDT

Even as Congress debates whether to extend a government program offering monthly payments for children — a key piece of the Biden administration’s anti-poverty agenda — funds have yet to reach some needy families, particularly in immigrant communities. 

Laura, a 27-year-old Hyattsville, Md., mother of two young children, should have been receiving $550 a month since July, when payments began on the expanded child tax credit program. Laura — who declined to give her last name because she is undocumented — first had to apply for an Individual Taxpayer Identification Number (ITIN) to file her income taxes to access the benefit for her U.S.-born children.

The ITIN is a nine-digit number issued by the IRS for people who do not have a Social Security number but need to file a tax return. 

But, Laura said recently, her ITIN has yet to come through, meaning her family still hasn’t received the money. 

“The pandemic has had a big impact on us,” said Laura, who originally is from El Salvador. “My husband lost his construction job, and he’s been able to work a few jobs here and there. We just have the money to pay the rent and food.” 

Pablo Blank, senior manager of immigrant integration at CASA, a grass-roots immigrant advocacy organization, said that a backlog of ITIN applications means many Spanish-speaking communities in the Washington region are missing out on the child tax credit (CTC) payments when they are most needed. 

“There’s a sense of frustration and unfairnesses,” he said. “The IRS has a backlog so they have not received the advanced CTC payments.” 

In a statement, the IRS said it is processing such applications “as quickly as possible despite social distancing requirements.” It is working through applications received in the first week of June. 

“We are taking every action to minimize delays, and we are processing requests in the order they were received,” the statement said. 

A large number of ITIN returns flow into the government each year; in 2019, over 2 million returns came in from ITIN taxpayers, representing $2.8 billion in taxes. 

“Every year there are many undocumented immigrants who apply for these IDs,” Blank said. “Many people feel more confident doing that with this new administration.” 

The CTC program can be accessed only by filing a tax return, meaning many have applied for an ITIN for the first time, Blank said. 

Part of the American Recovery Act passed in March, the expanded CTC offers monthly payments of $300 for each child 5 and under, and $250 for each child ages 6 to 17. 

The program split the credit into two phases: six monthly payments starting in July, followed by the remainder delivered in a bulk sum as part of an individual’s 2022 tax refund. 

The first payments have bolstered millions of Americans. The U.S. Census Bureau’s Household Pulse Survey tracked a 30 percent drop in food insufficiency for families with children. A team from Columbia University’s Center on Poverty and Social Policy has estimated the first two rounds of payments have kept 3.5 million children out of poverty and cut the child poverty rate by nearly 30 percent.  

The same researchers suggest that if all eligible children could access the benefit, it would reduce monthly child poverty by 40 percent. 

But so far access to the CTC differs across demographics and language barriers. 

A University of Michigan team analyzing the CTC recipients found that 56 percent of eligible Hispanic families received the July payment. That same month 69 percent of White families and 67 percent of Black families received it.  

By the August payments, the share of eligible Hispanic families accessing the CTC had risen to 65 percent, but the numbers still trailed Black and White families — 71 percent and 66 percent, respectively. 

And yet while Hispanic families have been less likely to access the program, they also have seen the largest boost compared with other demographics. A study of the rate of food hardship by the Center on Budget and Policy Priorities found that since July that number has dropped eight points in Hispanic communities, compared with five and three points in Black and White communities, respectively. 

Some of the lag in Hispanic participation in the program is tied to an error the IRS has acknowledged: families who applied with ITIN were denied their July payments. The government says the mistake was rectified with the August payment. But the backlog in ITIN applications continues to hold up access for families. 

The government has pointed out that even if families don’t get their ITINs before the end of the year, they will still receive the money they are owed for the first half of the program on their next refund. 

But as Blank points out, the need is urgent. 

“We are still encouraging people to apply because even if they lose out on the money now, they will have the money in February,” he said. 

“The problem is they need the money today.”