California offered checks to undocumented families. An IRS backlog is holding them up for many

Alfredo Gaudencio Diaz, an undocumented immigrant from Mexico, applied to renew an IRS processing number for people who don’t qualify to receive Social Security Numbers early this year when he started filing his taxes.

The process should take two months, the Ontario resident thought.

But six months later, Diaz, 42, said he has yet to hear back from the Internal Revenue Service about his Individual Taxpayer Identification Number.

That delay is preventing him from claiming any of the coronavirus stimulus or tax credits Gov. Gavin Newsom’s administration is offering to undocumented households to help them weather the pandemic. An ITIN is a requirement for that assistance.

Newsom made available the California Earned Income Tax Credit, the Young Child Tax Credit and Golden State Stimulus payments — ranging from $600 to $1,200 — to low-income residents and undocumented immigrants with ITINs. Combined, they can be worth hundreds to thousands of dollars.

”It’s frustrating,” Diaz said in Spanish. “It’s help that they are supposedly offering but I can’t qualify for it because I don’t have an ITIN.”

That’s one reason immigrant advocates are urging Newsom and the state Legislature to further expand the aid they’re offering to undocumented Californians, who have faced disproportionate job losses amid the pandemic. New York, for instance, does not require undocumented households to have an ITIN claim the assistance it’s offering to them.

Meanwhile, Assemblyman Miguel Santiago, D-Los Angeles, is authoring legislation, Assembly Bill 1515, that would establish the Earned Income Tax Credit Outreach and Education and Free Tax Assistance Grant Program to assist families in need.

“It would allow immigrants to obtain an ITIN number,” Santiago said. “It’s the link between the resources that are available and the person who desperately needs it.”

IRS troubles

Dana Hadl, a directing attorney for Bet Tzedek’s Employment Rights Project in Los Angeles, said the IRS is facing a significant backlog to process ITIN applications. One client she is helping has waited nearly five months to get an ITIN.

Another barrier, according to Hadl, is that identification documents required in ITIN applications must be either approved in-person by an IRS-Certified Acceptance Agent or mailed directly to the IRS. They cannot be sent through electronic means.

Hadl estimates there are about 900 Certified Acceptance Agents in the state. For those who find the appropriate agent, Hadl said, tax preparation services can be expensive, running about $200.

“I believe that currently for a lot of Californians without status, the Golden State Stimulus is purely theoretical,” Hadl said. “I think that it was really well-intentioned, but the foundation was not built to enable the majority of Californians without status to access this relief.”

According to the Taxpayer Advocate Service, an agency within the IRS, many people facing delays with their ITIN applications during the coronavirus pandemic. In 2020, the IRS received more than 1 million ITIN applications, according to the group.

About 600,000 undocumented immigrants in California are ITIN filers. That’s one-third of the estimated 2 million undocumented immigrants living in the state.

As of June 7, about 542,000 Californians filed taxes using ITINs, according to Newsom’s press office. That could amount to potentially $458 million in payments for the state’s undocumented immigrants.

Sasha Feldstein, economic justice policy manager at the California Immigrant Policy Center, is urging the state to develop its own excluded workers fund that would provide relief for undocumented residents who didn’t qualify to receive unemployment benefits or the federal stimulus payments.

“From an equity perspective, there is still a huge, huge gap to fill,” Feldstein said. “So many working Californians continue to be excluded because they either do not have an ITIN or (are) unable to get an ITIN in order to receive that credit.”

Outreach to undocumented households

Newsom’s budget proposal, which he is negotiating with top Democrats in the Legislature, calls for $2 million in outreach for state stimulus checks. That could help spread the word about direct payments from the state for undocumented families, as well as other coronavirus assistance like rent relief that they can access.

The administration does not have plans to drop its ITIN requirement.

“The Golden State Stimulus provides rapid payments to eligible Californians regardless of their immigration status. Similar to other assistance programs, the stimulus requires some identification, here an ITIN or an SSN, to ensure the integrity of the payments through our tax system,” the Governor’s Office said in a written statement.

For many immigrant families, according to Santiago, obtaining these funds can be the difference between “eating or starving.”

His bill would also require the Franchise Tax Board to assign grants to nonprofit community-based organizations to conduct outreach about ITIN eligibility and increase the number of households claiming the Golden State Stimulus, the federal and state Earned Income Tax Credit and the Young Child Tax Credit.

Santiago argued undocumented immigrants pay taxes, but are often unable to receive public benefits. One 2019 analysis by the California Budget & Policy Center found that undocumented Californians contributed $3.2 billion per year in state and local taxes.

Three months ago, Diaz of Ontario said his arthritis symptoms forced him to stop working as a day laborer. The father of two said he has resorted to borrowing money from friends to put food on the table and house his family.

With his wife making $12 an hour as a housekeeper, he is not sure how much longer they can afford to live in their apartment.

“There’s got to be a way to make this (assistance) available — regardless of status,” Hadl said.

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