If the new immigration reform bill is passed by both the Senate and by the House of Representatives, immigrants who are seeking citizenship would be forced to pay any back taxes that they owe. Although requiring back taxes appears to be a method of silencing critics who accuse the scheme of giving amnesty to lawmakers, it would be incredibly difficult to determine precisely who owed what.
The great majority of immigrants do not have work history documentation or any other form of paperwork and so paying back taxes would depend on some kind of secure honor system being in place. On May 8th a report from the Internal Revenue Service claimed that as many as 679 immigrants had decided to forego attempting to gain US citizenship due to the fact that they had to pay taxes. Their names were printed in the Federal Register’s quarterly report.
The immigration reform bill currently before Congress leaves the IRS with the task of working out who owes them taxes, but the Washington Post says that it has no specific instructions as to how to go about collecting such taxes. Most immigrants looking to gain citizenship receive payment in cash “under the table,” so they may have not paid taxes and certainly will have no proof as to their past earnings.
Many immigrants use fake Social Security numbers to work, which only account for withheld payroll taxes. Many of the 679 immigrants who gave up US citizenship are favoring taking up residence in Singapore, which does not have capital gains tax.