Sánchez, House Democratic colleagues oppose rule denying legal immigrants tax credits

October 13, 2026 Press Release WASHINGTON – Congresswoman Linda Sánchez (D-Calif.) led her House Democratic colleagues today in calling on the Trump administration to withdraw a proposed IRS rule that would strip certain legal immigrants of refundable tax credits. The rule would reclassify these credits as “Federal public benefits” under the Personal Responsibility and Work Opportunity Reconciliation Act ( PRWORA), imposing strict citizenship requirements on recipients. It is similar to a failed attempt by the Department of Health and Human Services last year to block certain legal immigrants from health services, an effort the courts struck down. “The rules regarding the eligibility criteria for refundable tax credits are clearly defined by Congress in the Internal Revenue Code, and PRWORA was clearly never intended to separately address them,” the members wrote. “Yet, this proposed regulation would strip hundreds of thousands of people of their deserved tax refunds by redefining refundable tax credits as ‘Federal public benefits’ under PRWORA, harming our constituents, their families, and our communities.” The members continued, “The administration’s apparent desire to change the law to attack immigrant communities does not change Congress’s intent when it passed PRWORA, nor does it change the law.” In addition to Sánchez, the letter was signed by Representatives Mike Thompson (D-Calif.), Eleanor Holmes Norton (D-D.C.), Rashida Tlaib (D-Mich.), Gwen Moore (D-Wis.), Sylvia Garcia (D-Texas), Jan Schakowsky (D-Ill.), Danny Davis (D-Ill.), Delia Ramirez (D-Ill.), Judy Chu (D-Calif.), Jesús “Chuy” García (D-Ill.), Jimmy Gomez (D-Calif.), Jimmy Panetta (D-Calif.), Steven Horsford (D-Nev.), Dan Goldman (D-N.Y.), Paul Tonko (D-N.Y.) The full text of the letter is available HERE and follows: October 7, 2026 Honorable Frank Bisignano Chief Executive Officer U.S. Internal Revenue Service 1111 Constitution Avenue NW Washington, DC 20224 Honorable Scott Bessent Secretary U.S. Department of the Treasury 1500 Pennsylvania Ave, NW Washington, DC 20220 Dear Secretary Bessent and CEO Bisignano, We write to express our strong opposition to the proposed rule on the Application of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) to the Refunded Portion of Certain Federal Refundable Tax Credits. The rules regarding the eligibility criteria for refundable tax credits are clearly defined by Congress in the Internal Revenue Code, and PRWORA was clearly never intended to separately address them. Yet, this proposed regulation would strip hundreds of thousands of people of their deserved tax refunds by redefining refundable tax credits as “Federal public benefits” under PRWORA, harming our constituents, their families, and our communities. Congress has modified these credits since PRWORA was enacted (most recently in Public Law 119-21 (2025)) but never made the changes Treasury proposes in this rule. Therefore, Congress clearly did not intend to import PRWORA’s limits on eligibility for federal public benefits into these refundable tax credits. In fact, Congress’s decision in P.L. 119-21 to limit the American Opportunity Tax Credit to people with a valid Social Security number would be nonsensical under Treasury’s reading of the statute, because those without one would have already been excluded. The Congressional Budget Office would not have estimated this provision to reduce the deficit by $247 million had the assertions in this proposed rule been accurate. Similarly, Congress’s decision in the Tax Cuts and Jobs Act (2018) to limit Child Tax Credit eligibility to people with a valid Social Security number would not have made sense if PRWORA already imposed a much stricter interpretation. The administration’s apparent desire to change the law to attack immigrant communities does not change Congress’s intent when it passed PRWORA, nor does it change the law. As the notice of rulemaking states, “Section 401(c)(1)(B) of PRWORA (8 U.S.C. 1611(c)(1)(B)) defines the term “Federal public benefit,” in relevant part, as “any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. ” Tax credits are absent from that list, which clearly consists of direct assistance programs delivered through federally funded programs. Congress would have explicitly specified tax credits if it had intended their inclusion. Wholly adopting a novel and unsupported interpretation of PRWORA to fit President Trump’s anti-immigrant agenda goes directly against the law as written and congressional intent. In fact, PRWORA separately addressed the issue of immigrants qualifying for refundable credits when it originally passed in 1996. Section 451 of PRWORA restricted the Earned Income Tax Credit (EITC) by barring those without a Social Security Number from the tax credit. The remaining eligible population is a much broader group than those deemed “qualified” immigrants under that law. If Congress intended to restrict refundable tax credits to only “qualified” immigrants, it would have not included this separate section in a distinct section of that law. The proposed regulation relies on the 2020 Department of Justice Office of Legal Counsel opinion stating that any payment to a taxpayer may be classified as a benefit under PRWORA regardless of congressional intent and history. The proposal fails to justify why this new interpretation, upending 30 years of precedent, is valid given Congress’s past decisions to make very clear which immigrants were or were not eligible for refundable tax credits. Had Congress intended to bar immigrants from taking advantage of refundable tax credits, it would have clarified the statute in any of the numerous changes made to PRWORA or refundable tax credits in the years since 1996. We urge you to withdraw this proposed regulation, which has no basis in the law, upends decades of precedent and runs counter to congressional intent. Sincerely, ### Issues : Immigration Tax Policy