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Dear Editor:
I am concerned that the IRS Tax ID Number may soon come to an end. As most practitioners are familiar with, for tax purposes, the Tax ID number substitutes for a Social Security number, which illegal immigrants cannot legally obtain. The Tax ID number lets them pay taxes with no questions asked about their immigration status. The IRS created the number so that it could tap into the large source of revenue generated by tax paying undocumented workers. Undocumented workers welcome the Tax ID because it allows them to comply with tax law by reporting their income. They can also claim a tax return if earned. Also, some banks are allowing them to open checking accounts using the number instead of a Social Security Number. Other benefits may be available in the future. Legislators in Illinois and several other states have sponsored bills to grant driver's licenses to illegal immigrants with tax ID numbers instead of Social Security numbers.

Naturally, the Internal Revenue Service (IRS) does not penalize employers or employees for using the Tax ID number for reporting income or wages. Further, the IRS does not share Tax ID information with other agencies. However, the Social Security Administration (SSA) has no such policy and may seek to penalize employers who file wage reports to the SSA using the Tax ID number. Now, the SSA is officially proposing to the IRS that it cooperate in this effort by penalizing employers based on the number of errors submitted on their annual wage reports.

In a May 24, 2002 letter to the SSA Commissioner, the SSA Inspector General has indicated that the agency will require that beginning no later than the end of 2003, the IRS penalize employers based on the number of errors submitted on their annual wage reports. This obviously puts the IRS in a dilemma. On the one hand, the agency is busy increasing its revenue by giving seminars to illegal workers on how to use the Tax ID number. On the other hand, it will now be asked to penalize the employers of those workers. This would largely render the IRS program ineffective since no employer would allow an employee to use a Tax ID number for reporting purposes. Of course, the INS supports the SSA recommendation since it is in the business of locating and removing persons who work illegally. It will be interesting to see how the IRS treats this proposal. After all, The agency's mission is to collect taxes and the potential tax revenue that could be obtained from undocumented workers is huge. To directly attack the viability of the Tax ID Number would dramatically reduce its (our) revenue and further degrade and exploit undocumented workers. Thus, it is important that this measure not be implemented.

The entire SSA memorandum can be found at http://www.ssa.gov/oig/adobepdf/A-03-01-30035.pdf

Comments about the recommendations should be made to Assistant Inspector General for Audit, at (410) 965-9700.

Thomas W. Dean, JD,
International Law Group, PC
Miami Beach, Florida


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