Bessent, IRS Call for Rules to Prevent Illegal Aliens From Getting Tax Credits

The Treasury Department and the Internal Revenue Service want tighter regulations to stop illegal aliens from potentially taking advantage of tax credits that are refundable. 

Specifically, the agencies want clearer language ensuring that “federal public benefits” can only go to people who are citizens, nationals or “qualified aliens.” The rules are intended to increase “enforcement” of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). 

“Under President Trump, the days of illegal aliens collecting taxpayer-funded benefits are over. The federal law is clear, and Treasury is enforcing it,” Treasury Secretary Scott Bessent said in a statement on Wednesday. “American taxpayers should not be forced to foot the bill for benefits going to those who are barred by law from receiving them. These proposed regulations end the abuse, protect the integrity of the tax system, and put Americans first.”

IRS Chief Executive Officer Frank Bisignano said in a statement that “refundable tax credits, like the Earned Income Tax Credit (EITC), were enacted to help low-to-middle income American families and workers receive critical financial support.”

“Today’s proposed regulations ensure that federally funded benefits are reserved for eligible taxpayers and protect the integrity of every taxpayer dollar,” he added.

According to a press release, the regulations include making sure an individual can qualify for a credit on date that they try to “claim” it, and legally “declare” that they can obtain the credit. The Treasury Department disclaims that one spouse must qualify on a joint return. 

The move comes amid two notable efforts within the Trump administration – cracking down on public benefits fraud and continuing deportations of illegal aliens. 

The president signed an Executive Order in February 2025 doubling down on the PRWORA.

“Title IV of the PRWORA states that it is national policy that ‘aliens within the Nation’s borders not depend on public resources to meet their needs,’ and that ‘[i]t is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits,'” the order states. 

“But in the decades since the passage of the PRWORA, numerous administrations have acted to undermine the principles and limitations directed by the Congress through that law,” the order continues. 

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