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Wednesday, April 19, 2006

Illegal immigrants eager to pay Uncle Sam
Records show illegal immigrants filed more tax returns this year despite tensions over immigration; most filers cite hopes for citizenship.

By CINDY CARCAMO
The Orange County Register

Jóse de Jesus Miramontes is an illegal immigrant who earns $8 an hour in construction and hadn't filed a tax return for the past seven years.

This year, it was different.

The current debate around immigration policy changes and the possibility of a path to legalization factored into his decision to plunk down $700 - about two weeks' worth of his salary - in unpaid taxes.

Although Miramontes doesn't have a valid Social Security number in his name, the government assigned him and millions of others in his situation a special number to file income tax returns.

"They say perhaps we'll be able to fix our papers. They talk about amnesty, so I want to comply with the law," Miramontes said.

Like thousands of other undocumented immigrants, the 26-year-old from Zacatecas, Mexico, hopes filing his tax returns will help establish proof of his residency and earn him citizenship in the long run.

Some local tax preparers saw a rise in undocumented immigrants filing taxes this season. Mexican Consulate officials in Santa Ana say they have seen 30 percent more Mexicans applying for the matrícula consular - a Mexican identification card - a prerequisite for filing a tax return for those who don't have a Social Security number.

A national group that advocates for low-income families based in Chicago has fielded calls from social-service organizations asking questions about tax preparation for illegal immigrants and what the bill might mean for them.

These groups are now expecting a surge of undocumented immigrants eager to file their tax returns if Congress does pass a bill with a path to citizenship for some of the estimated 12 million illegal immigrants in the U.S.

"We'll have thousands of people at our doors and we will need to have a plan," said Salvador Gonzalez, spokesman for the Chicago-based Center for Economic Progress, a nonprofit organization that offers free tax assistance for low- and moderate-income clients. "Anyone dealing with ITINs (an Individual Taxpayer Identification Number) will be swamped with work."

It's a common misconception that illegal immigrants don't file income tax returns, said Francine Lipman, a professor at Chapman School of Law.

"A lot of undocumented immigrants pay taxes and actually pay more in taxes than your similarly situated low-income family who is here legally," said Lipman, who recently completed a law-review article titled "The Taxation of Undocumented Immigrants: Separate, Unequal and Without Representation."

If the proposed immigration bill passes Congress with some sort of pathway to residency, eligible illegal immigrants would have to meet certain criteria, such as proving they've lived and worked in the U.S. for a certain time period. Filed income tax would be one way of proving their time here, in addition to showing they've complied with the tax laws.

Undocumented workers file nearly 6 million of the approximately 130 million individual tax returns filed each year, said Lipman, who plans to publish her findings in the Harvard Latino Law Review and the Tax Lawyer this spring. She obtained the figures from tax analysts Paula N. Singer and Linda Dodd-Major who quoted the IRS in a 2004 special report.

There are 7.2 million illegal workers in the country, reports the Pew Hispanic Center, a research organization based in Washington, D.C. If the Pew numbers and the IRS numbers used in Lipman's analysis are accurate, then about 83 percent of undocumented workers are filing tax returns every year.

Plus, the Social Security Administration last year estimated 75 percent of undocumented workers are paying Social Security withholding tax.

THE ITIN
By law, anyone who makes enough money regardless of legal status must file a tax return. The IRS and the state Franchise Tax Board allow people without Social Security numbers, such as illegal immigrants, to file their taxes by providing them with a special nine-digit number. An Individual Taxpayer Identification Number (ITIN) is given to a range of people without Social Security numbers, such as foreigners who invest in U.S. stocks and people in the U.S. with work visas.

Marilyn, an undocumented immigrant from Manila, Philippines, has filed income tax returns for four years with her ITIN. The 49-year-old private caregiver, who wouldn't give her last name because she works with a fake Social Security number, paid $800 in overdue taxes this season.

It's an investment, she said.

"My brother and sisters-in-law told me, 'You better pay. There will come a time you'll go get your 'green card' and they'll ask you 'what have you been doing here for so many years,'" Marilyn said. "The time will come for me in the future and I'll show them what I've paid to their country."

As of September 2005, the IRS reported it issued more than 8.6 million ITINs since the number was created in 1996. State tax officials have issued 3.9 million of their own taxpayer identification numbers since 1991.

Filers using ITINs have paid more than $48 billion in income taxes from 1996 to 2004, the IRS reported.

It's unknown, however, how much of that money came from undocumented workers.

MIXED MESSAGES
Immigration-control proponents criticize the policy, saying the government is sending a mixed message to illegal immigrants.

"On the one hand they catch them at the border. Once they get across the border we're giving them a bye. You're not supposed to work here but if you do, and while you're here, please use this number," said Marti Dinerstien, a fellow with the Center for Immigration Studies, a group that advocates stricter immigration limits. "The government is complicit in institutionalizing illegality."

In addition, critics said, the number is used for purposes beyond its original intent. Financial institutions, such as Wells Fargo and Washington Mutual, allow the number to be used to open bank accounts.

"It's a mechanism to establish their financial responsibility," said Julie Green Rommel, spokeswoman for Wells Fargo.

Rommel said the bank launched a pilot program in the Orange County and Los Angeles areas in December, which allowed the number to be used for mortgage loans.

Immigration control advocates also criticize the unwillingness of the IRS to share information about illegal workers with the Department of Homeland Security.

The IRS has a strict policy of not sharing information with other agencies because of privacy, said Raphael Tulino, a spokesman for the IRS. Unless there is a clear security risk, the IRS doesn't share information.

Immigration and Customs Enforcement is focusing on trying to access information on fraudulent Social Security numbers from the Social Security Administration, said Lorie Haley, a spokeswoman for the agency. The identification numbers are not an issue for them, she added.

RISE IN TAX FILINGS
That's why Miramontes said he's not afraid of filing his taxes. He hadn't filed before because he wasn't sure he would stay in the U.S. He decided a few years ago to stay here with his wife and 1-year-old son because he saw that work was more plentiful and better paying than in his hometown of Tlaltenango, Mexico.

A few weeks ago, he paid $60 to Lupe Gomez who helped him file his return at El Bloquecito Income Tax Service in Santa Ana.

"Now that we're here we're planning on staying here and do everything right - and collaborate with them," Miramontes said.

Gomez, who has owned the business for more than 15 years, said he's seen about 10percent more clients applying for ITINs this tax season, compared to past years.

"We're definitely seeing more people coming who are wanting to declare for multiple years back," Gomez said.