COMMUNITY FORUM: Yes, illegal immigrants pay taxes

Do illegal immigrants have to pay taxes?

According to the Internal Revenue Service, anyone who earns money in the United States is subject to tax laws. The IRS does not differentiate between immigrants who are here legally or illegally - their primary concern is to collect tax on any monies earned, regardless of the legal status of the individual earning the money.

Former IRS Commissioner Mark Everson put it this way in a speech given to the National Press Club: "We want your money whether you are here legally or not and whether you earned it legally or not."

If someone enters the U.S. illegally and begins working, that income is taxable and that individual is required to report any income earned to the IRS.

The requirements for an illegal immigrant to work in the United States are the same as they are for citizens. They must complete an I-9 form which shows proof of eligibility to work in the United States and they must complete a W-4 form which registers them for taxes and withholdings. One of the documents which can be used to complete the I-9 form is a Social Security number; another is a driver’s license. Quite often, illegal immigrants will make up, steal or purchase fake documents in order to complete the I-9 form so they can be hired by a business.

Once hired, persons working "on the books" are subject to the same tax laws as U.S. citizens. They pay federal, state and Social Security/Medicare taxes at the same rates as U.S. citizens. There are no exceptions for illegal immigrants.

If an illegal immigrant does not want to work "on the books" at a business or chooses to be self-employed, they are still required by law to report their income and to have that income taxed. The way the IRS expects these people to report their income and file their returns is by use of an Individual Tax Identification Number. To obtain an ITIN, a person needs to submit an application to the IRS and a document which serves as proof of identity, such as a driver’s license. Counterfeit driver’s licenses are sometimes purchased in order to obtain an ITIN because they are cheaper to buy than other forms of fraudulent identification, such as Social Security numbers or birth certificates.

Illegal immigrants may not necessarily receive the same benefits as citizens for the same tax dollar paid. For example, illegal immigrants paid "on the books" or who file a return using an ITIN are generally not entitled to receive Social Security benefits, even though they are having money deducted from their checks to fund Social Security. This is because under current law an alien who worked in the U.S. illegally can only become eligible for Social Security benefits by becoming a legal U.S. resident. The Social Security Administration has estimated that 75 percent of undocumented immigrants pay payroll taxes and they contribute $6 billion-$7 billion in Social Security funds they will be unable to claim because they are ineligible to receive Social Security benefits.

In addition to payroll taxes, people pay the same taxes every time they make a purchase where the goods and services are taxable. This includes vehicles, clothing, durable goods (washers and dryers, for example), tools, gasoline, etc. These taxes fund the majority of public services such as police, sheriff and fire services, roads maintenance, parks services and the like.

Of course, anytime anyone rents a house, apartment, mobile home, etc. they pay property taxes either directly (as part of their house payment) or indirectly (as payment to a landlord, who must pay property taxes on rental properties). These taxes cover the majority of state and local costs for schools and other services. These costs are paid whether someone is in the country legally or not.

Local employers most often mentioned in illegal immigration discussions - Hormel and Fremont Beef - pay their employees "on the books." In other words, the people working at those facilities are paying taxes according to U.S. tax laws.

The only way an illegal immigrant can avoid paying income taxes is to receive payment for work in cash and to fail to report that income. This is the same way that citizens and legal aliens can avoid paying income taxes. Additionally, businesses who pay their employees in cash and fail to report those payments may be in violation of US tax laws.

John LaMar is a member of the Mayor’s Task Force on Illegal Immigration. Community Forum is a regular feature of the Tribune’s Opinion. To contribute, contact Tracy Buffington, editor, at (402) 721-5000, Ext. 1436, or via e-mail at fremont.newsroom@lee.net.