Stimulus Check Snafu Highlights Foreign Student Worker Scheme

News about stimulus cash “mistakenly” being dispensed to non-resident aliens is another black eye for a shadowy foreign student work program that’s costing America billions of dollars a year.

Politico reports that the Internal Revenue Service improperly distributed payments to thousands of foreigners in April. The error stems from a common tax-filing blunder by those on F-1 student and J-1 exchange visas. These workers, studying at universities and working summer jobs, often use TurboTax and other e-filing tools without knowing that the systems are designed only for U.S. residents. In its haste to send checks out, the IRS just waved them through.

Though the IRS has not said how much money it incorrectly disbursed, a survey of more than 500 schools last week found that 43 percent had foreign students who believed they received a payment in error.

“[The students] don’t think they’ll necessarily ever be caught or they don’t think there’s really that big a problem,” Donna Kepley, president of the tax firm Arctic International Kepley, told Politico.

A record 1.1 million foreign students were in the U.S. last year, according to the Institute of International Education. In addition, the government granted nearly 400,000 J-1 visas.

Growing right along with these numbers is the Optional Practical Training (OPT) program for foreign students, some of whom use it to extend their stay in this country after leaving school. Over the past 20 years, OPT has metastasized into the largest guest worker program in the U.S., despite numerous findings of fraud, FAIR noted last month.

Not only is there no limit on how many foreign students and ex-students can be hired through OPT, there is scant oversight of the program and fewer worker protections than with H-1B work visas. 

OPT is particularly odious in how it disadvantages American workers. Employers of OPT-enrolled aliens do not pay payroll taxes for the Social Security and Medicare trust funds for those workers. This saves those employers 8.25 percent on the wages to OPT participants, while excusing the aliens from paying these deductions as well, costing the two trust funds more than $2 billion a year.

This is an absurd inequity when more than 30 million Americans are jobless, the highest level since the Great Depression.

President Donald Trump recently stated: “It would be wrong and unjust for Americans laid off by the [coronavirus]to be replaced with new immigrant labor flown in from abroad. … We must first take care of the American worker.”

Suspending the OPT program, reducing the influx of foreign students and tightening accounts at the IRS are three sensible steps to make good on that pledge.