In my financial services career, I have learned one rule that never bends: You pay claims to the beneficiaries named in the document, not to whoever shows up with a plausible story. A trustee who ignores that distinction loses a license, a client, and occasionally a freedom. Washington has run a piece of the tax code on the opposite theory for 30 years, and this month it finally noticed.

On Aug. 19, Treasury and the IRS proposed a rule clarifying that the refundable portion of four tax credits, the earned income tax credit, the child tax credit, the American opportunity tax credit, and the adoption credit, counts as a federal public benefit under a law Congress already passed in 1996. Under that statute, the Personal Responsibility and Work Opportunity Reconciliation Act, only citizens, nationals, and a defined list of qualified aliens may collect a federal public benefit. Treasury did not invent a new restriction. It started enforcing a dormant one already on the books.