Taxing Time of Year
By Josh Brustein
Satwant Kour is accustomed to people coming to her with tough questions.
Her organization, Workers Awaaz (the name means workers' voice in
most South Asian languages), assists domestic workers with issues
of exploitation on the job. But as the April 15th deadline to file
taxes approaches, many of her clients, almost all of them undocumented
and working off the books, have one question. What about taxes?
"People are confused about what they should do," said
Kour. "Whether they should pay or whether they should not.
They are also scared. There is a lot of confusion in their minds."
Undocumented workers cannot work legally, but those who do work
are still required to pay taxes. Over half of New York City's undocumented
immigrants follow this law and file using a special taxpayer number
provided by the Internal Revenue Service, according to a 1998 Urban
Institute. They may be hoping to get a tax refund, wanting to
obey whatever laws they can, or betting on the chance that paying
taxes may help them gain citizenship further down the road. To counteract
these benefits however, there are many problems and fears that keep
many immigrants--both documented and undocumented--from filing.
In many ways, the challenges that undocumented workers face during
tax season are similar to those of any other low-income worker.
Many work sporadically, and earn very little. And for the most part,
they are either paid off the books or misclassified as independent
contractors by employers looking to avoid paying taxes themselves.
When the time to file taxes comes, they have no record of what
they have earned. This leaves the taxpayer with a common yet difficult
decision, according to Amy Brown, director of the Community
Food Resource Center . "They could report their employer,
they could request the W-2, and they could get the employer in trouble,"
she said. "But if they feel that they need that job then they
may very well choose to file as self-employed and not take those
steps." Often, they choose the latter.
But filing as self-employed, or being classified as an independent
contractor, leaves a worker to pay both the employer and the employee's
share of certain taxes, like unemployment insurance and social security.
For those working for very little already, this is a huge burden.
Being unsure about what to do in this situation, and the fear of
the complicated tax system in general, keeps many away, according
Fears and Hopes
Another reason that immigrants don't file, according to Kour, is
that they are afraid to put their names into what they see as a
hostile system after 9/11. "Everybody's scared," said
Kour, who works almost exclusively with South Asians, a group that
has felt a particularly harsh backlash in the past eighteen months.
"Especially nowadays with this registration
going on and Homeland Security."
But while post September 11th policy has involved crackdowns on
immigrants in other places, the Internal Revenue Service continues
its policy of not sharing information with the federal immigration
agencies. "We don't do routine information sharing," said
Kevin McKeon, a spokesperson for the agency in New York. "We
have our disclosure laws, which are part of the tax code, which
prohibit us from sharing information."
In fact, the Internal
Revenue Service, working to get even the most reluctant taxpayers
to file, has several programs for immigrants who aren't legally
able to work but do so. In 1996, it developed the Individual
Taxpayer Identification Number, which people who are not eligible
for a social security number can use to file. At the end of last
year's tax season, 4.9 million such numbers were issued nationwide.
There are also various tax credits, like the Child
Tax Credit, which low income workers are eligible for regardless
of their immigration status.
"It is in the IRS's best interest to collect taxes and to
have people be compliant, regardless of their legal status,"
said Brian Cheigh, who runs tax clinics for South
Brooklyn Legal Services, with partial funding from a Low
Income Taxpayer Clinic grant from the IRS.
Filing can be in the best interests of undocumented immigrants
as well. Brown points out that the possibility that low-income immigrant
workers will gain from filing taxes is much greater than the possibility
of them losing. "We've done a lot of taxes for immigrants,
legal or not," she said. "People who are filing their
taxes -- and for many people this is the first time they are filing
their taxes because they have been afraid of dealing with the tax
system -- by far we're getting [them] money back that they are due."
One of the most significant sources of tax relief available to
low income workers is the Earned
Income Tax Credit. Undocumented workers are not eligible --
a social security number is required to qualify -- but many legal
immigrants are. The credit, which can reach a total of $5,000 per
family, is essentially a reverse income tax for low-income workers.
Lack of knowledge about the credit and fear of the tax system in
general, problems that are even more common among immigrants than
they are in other low-income communities, cause about 230,00 eligible
New York City workers to miss out on half a billion dollars in credits
Despite their fears of putting themselves onto the government's
radar screen, many undocumented immigrants want to file taxes in
the hopes that being compliant will aid them if and when they get
a chance to change their immigrant status. This has been true in
the past. The Immigration and Naturalization Services (now the Bureau
of Immigration and Citizenship Services) regularly looks at
tax compliance during immigration proceedings. And in an amnesty
in 1986 that helped more than 2.7 million immigrants get legal status,
tax records were used to establish residency.
Although a repeat of any amnesty in the near future seems very
unlikely -- conversations between George W. Bush and Mexican President
Vincente Fox regarding undocumented Mexican immigrants ended abruptly
after September 11th, 2001 -- immigration advocates say that any
new measure will almost certainly take taxes into account. Getting
one's name into the system might actually be a good thing.
"If and when someone has the opportunity to apply for an adjustment
of status, tax records can show that they have worked, that they
are able to support themselves, which is important," said Amy
Sugimori, of the National
Employment Law Project."It is a way of being able to document
earning capability, and that you have good moral character."
The chance of this happening is enough to make some undocumented
immigrants overcome their fears and file.
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