For Honest but Illegal Aliens, a Tangle of Laws

It’s tax time again, and the IRS has announced a new procedure for aliens who are working here illegally to report their earnings without fear. Ineligible for a valid Social Security number, they can file under the number “SSA 205(c)” (the section of Social Security law that prohibits their getting a proper number) and feel confident that they won’t be deported, says the announcement, “since tax information is not routinely shared with the Immigration and Naturalization Service.”

This solves the problem of obeying the tax laws, but calls up other problems. Filing the tax return does admit a deportable offense--working illegally--under immigration law. It also admits that the Social Security number under which the taxpayer has worked is false, a punishable offense under Social Security law.

Thus the illegal alien, who wants nothing more than to legalize himself, must choose among the rules of the Social Security Administration, the Internal Revenue Service and the Immigration and Naturalization Service. “Congress has dealt with the needs of each separately,” says Jerry Dees, regional operations assistant for H&R; Block in Southern California; “no one has said let’s talk about Social Security numbers, amnesty and legal status, and tax obligation, and try to reconcile them.”

Hasn’t Been Perilous

By current estimates, there are between 3 million and 5 million undocumented aliens in the country, says U.S. Census Bureau demographer Jeff Passel. About three-quarters of them are over age 15 and therefore potential wage-earners. What’s more, according to an oft-cited 1975 Labor Department study, 73% of them had federal taxes withheld and 77% had Social Security deductions.

Few--31.5% in the study--filed tax returns, probably fearful of discovery. Thus, “since most are low wage earners, and probably due refunds,” says Linda Wong, attorney with the Los Angeles regional office of the Mexican American Legal Defense and Educational Fund, “the government gets a windfall.”

In actuality, filing tax returns doesn’t seem to have been very dangerous: Many illegal aliens have done it for years. Most work under false Social Security numbers, and a few under the special not-valid-for-employment numbers issued for identification alone. The IRS would question the numbers, and if the taxpayer explained honestly, the IRS “would assign them an internal processing number, for the IRS alone,” says IRS spokesman Shirley Nakagawa in Los Angeles. “Then we can process the return.”

The new procedure just skips two steps: “Putting down 205(c) already tells the IRS, ‘No, I don’t have a number and I can’t get one’,”’ says Jerry Dees. The IRS then assigns a processing number without further inquiry.

Citizenship No Basis

To the IRS, the worker’s immigration status is irrelevant. Its concern is tax obligations, which flow from earnings, not from citizenship, or right to work. Indeed, says IRS spokesman Rob Giannangeli, also in Los Angeles, “there’s nothing in the tax law that says you can’t pay someone a refund due just because they’re undocumented.”

The IRS’ assurances disingenuously omit the fact that tax information does go to the Social Security Administration, which routinely shares with the INS. The W2 reports that employers prepare for wage-earners go first to Social Security and thence to the IRS: The self-employed must file a self-employment tax form with the IRS, which sends it on to Social Security.

But Social Security doesn’t care about immigration status either. If its computers reveal that the taxpayer’s given number is false or someone else’s or not-valid-for-employment, the administration tries to contact him, straighten out the discrepancy, and credit him with the Social Security contribution. (If that’s not possible, it sits forever uncredited.) “If you worked in covered employment, legally or not, we’d post it,” says Social Security Administration spokesman John Trollinger. “Eligibility for benefits is not based on citizenship.”

The illegal worker may be using a fraudulent Social Security number, but only to pay into the system. Social Security’s concern is the people who are taking money out--by claiming benefits they don’t deserve or selling false cards so others can.

Social Security does, however, share information with the immigration service--the undocumented alien’s greatest fear, as the IRS realized. Immigration gets routine reports of earnings on a not-valid-for-work number, and may at any time ask Social Security for identification and whereabouts of a specific alien.

The INS does care about the illegal worker, but time is on his side. By the time Social Security knows of his work, and passes on the information, it could be a year or two since he had the job. Moreover, the INS may just notify the employer that the worker was illegal; it’s not “cost-effective,” says a spokesman, to pursue one individual who may have disappeared or become legal.

Some New Dangers

Nevertheless, and IRS reassurance aside, there are some new dangers in filing a return. Under 1986 immigration laws, there are sanctions against employers who hire illegals, so the illegal’s tax return could mean trouble for his employer as well.

There’s also danger in not having filed. The amnesty granted those here since 1982 is only a forgiveness for being here illegally. (Amnesty applicants are authorized to work and eligible for Social Security numbers on application.) Not only are tax returns “one of the ways by which amnesty applicants can prove they were here and worked,” says INS spokesman Duke Austin in Washington, “but the IRS has always been on record as saying this is not an amnesty on taxes, and if they audit the alien later, nothing in the amnesty law says he’s not liable for back taxes.”

For all the potential consequences, tax filing seems only another question, not a priority--for either immigrant advocacy groups or government officials. Most assume, like Los Angeles immigration lawyer Jonathan B. Daks, that “the IRS is probably understaffed and the INS is definitely understaffed, and they’re busy enough without chasing the poor immigrant who’s making a good faith bid to conform to tax law while trying to legalize his status.”

But any of these agencies might have time and inclination in the future. And given the conflict and overlap among laws, who dares depend on anything?