What Back Taxes?

By Jon Feere, April 30, 2013

For months now, the "Gang of Eight" senators, President Obama, and the lobbyists who helped craft the Schumer-Rubio bill have been justifying amnesty by assuring skeptics that illegal immigrants applying for legal status would be required to pay back taxes on money earned during the years they lived illegally in the United States.

Except the actual bill does not require the payment of back taxes.

Instead, it provides that amnesty applicants must have "satisfied any applicable federal tax liability" that has previously been "assessed" by the Internal Revenue Service (IRS). A tax is "assessed" only when the IRS officially records that it is owed, which occurs after a tax return has been submitted or after the IRS has conducted an audit. Since illegal immigrants working off the books do not submit tax returns and are generally not the subjects of IRS audits, it is unlikely that this provision will have any impact on the majority of amnesty applicants.

The bill also does not address the employers' federal payroll tax liability (e.g. Social Security and Medicare (FICA) taxes), nor does the bill address liability for state and local taxes.

The absence of a back taxes provision is yet another example of how this bill gives a pass to lawlessness on the part of both illegal immigrants and their employers. The Gang of Eight should be embarrassed for attempting to mislead the American people.

The lack of specific language on back taxes requirement should not come as a surprise.

Sen. Charles E. Schumer (D-N.Y.) — one of the architects of this latest amnesty bill — has previously worked to prohibit the IRS from requiring amnesty applicants to pay back taxes. Two weeks before the 1986 amnesty bill (IRCA) was enacted, Congress enacted the Tax Reform Act of 1986, which required aliens applying for permanent residence to pay back taxes. Only months after IRCA's passage, Schumer, then a member of the House of Representatives, wrote a letter to the Secretary of the Treasury urging the government to "immediately" issue a regulation declaring that illegal aliens applying for permanent residence pursuant to IRCA were exempt. According to Schumer: "Obviously, we could not have a successful legalization program if by submitting an application an alien became vulnerable to an enforcement action by the IRS." While the IRS declined, a year later Congress amended the tax law to prohibit the INS from providing the IRS any tax information of amnesty applicants.

Similarly, the amnesty bill of 2007 originally included a requirement that illegal aliens pay back taxes. But the Bush administration persuaded Congress to remove the provision, arguing that it would have been too difficult to administer. The National Taxpayers Union estimated the change would mean a loss of tens of billions of dollars, and argued that most law-abiding Americans would find the change "totally distasteful".

If the Schumer-Rubio bill becomes law, it will be clear that only citizens and legal residents are responsible for paying taxes, and that illegal immigrants are above the law.