The historic case of James v. United States held that illegal gains constitute income that must be reported, despite any legal obligation which might arise to make restitution. [1] However, a whole different tax question arises for collecting legally earned income from residents illegally in the country. While the issue may not be clear to the millions of immigrants illegally residing in the country, the issue is clear to the Internal Revenue Service. “Everybody is a citizen for tax purposes,” remarks one Baltimore tax-preparer. [2]
This year, illegal immigrants have been sending in federal tax returns in what will likely be record numbers, despite concerns of immigration raids and the ability of the IRS to identify illegal immigrants through these returns. [2] While illegal immigrants are not issued Social Security numbers, they are allowed to file through individual taxpayer identification numbers issued by the Internal Revenue Service. [3] There have been 11 million of these numbers issued since the program began in 1996. [4] Returns through individual taxpayer identification numbers increased 30 percent in 2005, attributed to community outreach and potential amnesty programs using payment of taxes as a criteria to citizenship. [5]
While the Internal Revenue Service insists these individual taxpayer identification numbers have no significance on the illegal immigration debate, states and corporations have used the numbers to create other services. [6] For instance, Bank of America allows undocumented residents to obtain credit cards with these numbers while Citibank has allowed users of these numbers to access mortgage products. [7] States have been no stranger to individual taxpayer identification numbers as well. Illegal immigrants in West Virginia, Kentucky, New Mexico, Utah and Illinois can now use their individual taxpayer identification numbers to obtain driver’s licenses. [8]
Pro-illegal immigrant groups applaud individual taxpayer identification numbers as allowing undocumented residents to live normal lives. [9] Advocates continue to push for amnesty programs affording legal status to those with a documented record of tax filings. [10] They stress that “undocumenteds actually contribute more to public coffers in taxes than they cost in social services…[and] contribute to the U.S. economy by investing and consuming goods and services.” [11] Crying foul at the requirement that illegal immigrants must pay taxes but are not entitled to certain government benefits, advocates propose allowing those who file to be granted eligibility to receive increased government benefits. [12]
The program is not without its critics.
At the American Immigration Law Foundation, director of the Immigration Policy center Ben Johnson says the issuance of individual taxpayer identification numbers is clear evidence that the United States immigration system is broken. [13] Citing reports that illegal immigrants cost the United States more than $10 billion per year, critics suggest that the taxes paid by the undocumented residents are heavily outweighed by the costs they create from consumption of public goods. [14] Some suggest through their issuance of individual taxpayer identification numbers, the Internal Revenue Service “places a higher value on collecting revenue than removing illegal immigrants.” [15] Beyond individual taxpayer identification numbers, opponents also point to the use of fraudulent social security numbers and the perils of identity theft. [16]
Perhaps the sides can find a middle ground. The best middle ground would be to allow these individual taxpayer identification numbers, but to not allow these numbers to be used for anything except the payment and collection of taxes. Those who are Anti-Illegal Immigration, while perturbed at the thought of low border security and weak national defense, would agree that the issuance of some type of identification number only for purposes of collecting taxes would help increase government revenues. Pro-Illegal Immigration advocates, though unhappy that these oftentimes permanent residents are not afforded citizenship through these numbers, should find it reasonable that if a worker will avail himself to the benefits of working in the United States then that same worker should also pay dues to the economy that supports him or her despite not being able to recover full citizenship benefits.
Regardless of the immigration policy debate, this Tuesday on Tax Day, undocumented laborers will proudly be called citizens by one government agency – the Internal Revenue Service – but will probably not be afforded the same status by another, Immigrations and Customs. [17]
Sources
[1] James v. United States, 366 U.S. 213, 255 (1961).
[2] Christy Goodman, On Tax Day, Everyone’s a Citizen, Many Learn, WASH. POST, Apr. 15, 2007, at PW01.
[3] Nina Bernstein, Tax Returns Rise for Immigrants in U.S. Illegally, N.Y. TIMES, Apr. 16, 2007, at C1; KTar.Com, IRS Can Identify Illegal Immigrants through Tax Returns, http://ktar.com/?nid=6&sid=447968 (last visited April 16, 2007).
[4] Bernstein, supra note 3.
[5] Id.
[6] Juliana Barbassa, Undocumented Workers Rush to File Tax Returns, THE SALT LAKE TRIB., Apr. 14, 2007, available at http://www.sltrib.com/ci_5668843.
[7] Id.
[8] Id.
[9] Id.
[10] Bernstein, supra note 3.
[11] Francine J. Lipman, The Taxation of Undocumented Immigrants: Separate, Unequal, and Without Representation, 9 HARV. LATINO L. REV. 1, 2-3 (2006).
[12] Id. at 55.
[13] Barbassa, supra note 6.
[14] Mary Fitzgerald, Illegal Immigrants’ Cost to Government Studied, WASH. POST, Aug. 26, 2004, at A21.
[15] Matt Hayes, Tax Laws Protect Illegal Workers, FOXNEWS, Oct. 30, 2003, available at http://www.foxnews.com/story/0,2933,101624,00.html.
[16] Kathy McKee, Myths and Lies of Illegal Immigration, THE AM. RESISTANCE, Jan. 4, 2004, available at http://www.theamericanresistance.com/articles/art2004jan04.html.
[17] Barbassa, supra note 6.