Transcript Tax Issues Unique to Immigrant Workers

Tax Issues Unique to Immigrant
Workers
Chris Lee
Office of the National Taxpayer
Advocate
[email protected]
June 16, 2005
About the Taxpayer Advocate Service
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Headed by Nina Olson, the National Taxpayer
Advocate
Independent organization within the IRS that helps
taxpayers resolve problems within the IRS and
recommend changes that will prevent the problems
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Approximately 2,000 employees within the IRS working to
help you
Each state has at least one Local Taxpayer Advocate
Taxpayer Advocate Service & ITINs
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In her 2004 Annual Report to Congress, the National
Taxpayer Advocate identified the processing of ITIN
applications as one of the most serious problems
within the IRS:
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delays in processing tax returns filed with ITIN applications;
failure to process extension requests submitted by ITIN
applicants;
inconsistent assistance provided to ITIN applicants by the
Taxpayer Assistance Centers; and
issuance of ITIN notices in the wrong language.
Taxpayer Advocate Service & ITINs
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The National Taxpayer Advocate continues to
work with the ITIN Program Office to improve
the processing of ITIN applications.
In addition, the National Taxpayer Advocate
has asked that Low Income Taxpayer Clinics
and other stakeholders representing ITIN
taxpayers are consulted in advance about
any proposed procedural changes.
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E.g., revised Acceptance Agent procedures
Low Income Taxpayer Clinics
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IRC § 7526 gives authorization for IRS to
provide grants to LITCs for ESL and
controversy work
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The National Taxpayer Advocate administers
LITC Program, overseeing the 154 LITCs
nationwide
$8 million was appropriated for 2005 grant cycle
LITC Confidential
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Confidentiality of taxpayer information is a key
concern for many LITC clients and for the National
Taxpayer Advocate
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Publication 3319, the LITC grant application, states:
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"Taxpayer information is confidential and should be shared on
a limited basis. Grantees are responsible for ensuring that
taxpayer information is not compromised. Only those who
have a need to know in order to effect resolution of the
controversy should be allowed access to taxpayer information.
A newspaper or other media reporter does not have a need to
know of taxpayer information."
Confidentiality Revisited
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IRC § 6103 restricts the IRS from disclosing
tax return information
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Enacted almost 30 years ago as part of the Tax
Reform Act of 1976
Provides that, in general, tax returns and tax
return information be kept confidential
All exceptions to this general rule must be
specifically set forth in § 6103.
Confidentiality Revisited
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Statutory exceptions to confidentiality provision include:
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Disclosure for tax administration purposes: § 6103(h)(2) provides
that in matters involving tax administration, tax information may
be inspected by DOJ if the TP is a party to the proceeding or the
proceeding involves determination of liability under the Code or
the collection of tax imposed under the Code.
Disclosure to agencies for non-tax criminal cases: § 6103(i)(1)
provides that during the course of Federal nontax criminal
investigations, Federal agencies must obtain an ex parte order
from a Federal district judge or magistrate in order to gain access
to tax returns and tax information provided by the taxpayer or the
taxpayer’s representative.
Confidentiality Revisited
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§ 7216 prohibits tax return preparers from
disclosing tax return information
Exceptions include:
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Disclosure pursuant to other provisions of Code
Disclosure pursuant to an order of court or other Federal
or State agency
Disclosure pursuant to formal written consent of
taxpayer
“Tax return information” includes name, address
or identifying number
Losing Confidence in Confidentiality?
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Advising ITIN holders who may be reluctant to file taxes
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In general, for a Federal agency to obtain tax returns or tax return
information for purposes of a criminal investigation or proceeding,
it must obtain an order from a Federal judge.
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Thus, in general, tax information will be shared with another Federal
agency only if he were already or were likely to be placed under
investigation for some nontax violation of law.
Undocumented workers may show good moral character for
immigration purposes by filing tax returns.
Tax returns are good way of proving residency in U.S. and for
verifying income levels necessary for mortgages and other loans
Don’t compound problems by violating tax laws
Losing Confidence in Confidentiality?
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Have assurances from Treasury, TIGTA, and the Commissioner
that the IRS is interested only in tax administration
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“[T]he Service believes at this time that any sharing of confidential
taxpayer information, directly or indirectly, with immigration
authorities would have a chilling effect on efforts to bring ITIN
holders, and potential ITIN holders, into the U.S. tax system. Such
an initiative would deprive the Federal Government of tax revenue
by discouraging illegal workers in the U.S. from participating in the
tax system, when the Code requires them to pay tax on their U.S.
earnings.”
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Testimony of Mark W. Everson before the Subcommittee on Oversight
of the House W&M Committee, March 10, 2004