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Tax Filings Seen Dipping Amid Trump Crackdown On Illegal Immigration

Apr 17, 2017
Originally published on April 17, 2017 1:49 pm

Millions of taxpayers are rushing to complete their federal and state filings before the April 18 deadline. Among them are several million people in this country illegally, and there are signs that fewer such immigrants are filing than in years past.

There is a common belief that immigrants in this country without authorization don't file or pay taxes. But the IRS says that last year nearly 4.5 million people across the country who don't have Social Security numbers filed federal tax returns and many are in this country illegally.

At the Unity Council, an East Oakland, Calif., community-based organization offering free tax preparation for low-income people, about a dozen clients and IRS-certified volunteer tax preparers spent a recent afternoon hunched over rows of aging computers.

"We'll help everyone," says Clarissa Johnson, who directs the clinic. "We don't ask them about their immigration status. That is between them and the tax preparer and that is confidential."

Many of these people use Individual Taxpayer Identification Numbers, or ITINs. Many ITIN holders are foreign investors or students. But it's generally understood that most tax filers using an ITIN are in this country illegally — like 36-year-old Axel, who asked that we not use his last name because of his immigration status. He came to the U.S. from Guatemala several years ago. In his native Spanish, he said he has no hesitation about filing his tax returns.

"First, because it's my responsibility, I want to do things the correct way," he says.

Axel says a few years ago a shady tax preparer made mistakes on his return and he wound up getting fined several thousand dollars.

"I don't like to create problems for myself," he says.

There is an obvious incentive to file: a chance to get a refund. Johnson says another reason is that if a person winds up in immigration court, a record of having filed taxes is considered evidence of "good moral character."

"And especially if they are working toward their citizenship, it's something that can show that they're here for the long haul. They're here each year paying their taxes," she says.

According to the Taxpayer Advocate Service, an office of the IRS, ITIN filers last year paid almost $24 billion in federal taxes.

Yet as the Trump administration cracks down on illegal immigration, there's some anecdotal evidence that fewer immigrants using ITINs are choosing to file their taxes this year.

"Many of our clients are telling us that in years past they felt more hope and more of an ability to have a pathway toward citizenship and lately there's a lot less hope," says Max Moy-Borgen, who runs the tax program at the Mission Economic Development Agency in San Francisco. It's one of the largest free tax preparation programs in the country..

Overall, tax service providers in the San Francisco Bay Area say there's about a 20 percent decline in the number of people filing with ITINs. There are similar reports from service providers in other areas of the country, according to Francine Lipman, who teaches tax law at the University of Nevada.

"Sending in a tax return with your current address and information is very unnerving to a population that wants to comply with the law and is actually leaving significant refunds on the table by not filing tax returns," she says.

Still, the IRS is barred from sharing its information with other government agencies such as the Department of Homeland Security except under limited circumstances.

But Lipman says many ITIN filers have to decide whether to trust that firewall.

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DAVID GREENE, HOST:

Millions of taxpayers are rushing to complete their federal and state filings before the tax deadline tomorrow. And among them are several million people in this country illegally. But as NPR's Richard Gonzales reports, tax preparers are seeing signs that fewer immigrants may be filing this year than in years past.

RICHARD GONZALES, BYLINE: There's a common belief that immigrants in this country without authorization don't file or pay taxes. But the IRS says that in 2015, nearly 4 and a half million people across the country who don't have Social Security numbers filed federal tax returns. And many are in this country illegally.

CLARISSA JOHNSON: Unity Council, how can I help you?

GONZALES: The Unity Council is an East Oakland community-based organization offering free tax preparation for low-income people. On a recent afternoon, about a dozen clients and IRS-certified volunteer tax preparers are hunched over rows of aging computers.

Clarissa Johnson directs this clinic.

JOHNSON: We'll help everyone. We don't ask them about their immigration status. That is between them and the tax preparer.

GONZALES: Many of these people use individual taxpayer identification numbers, or ITINs. Some ITIN holders are foreign investors or students. But it's generally understood that most tax filers using an ITIN are in this country illegally, like 36-year-old Axel, who asked that we not use his last name because of his immigration status. He came to the United States from Guatemala several years ago. And he says he has no hesitation about filing his tax returns.

AXEL: (Speaking Spanish).

GONZALES: "First, because it's my responsibility," he says, "and I want to do things the correct way."

Axel says a few years ago, a shady tax preparer made mistakes on his return, and he wound up getting fined several thousand dollars.

AXEL: (Speaking Spanish).

GONZALES: "I don't like to create problems for myself," he says.

There's an obvious incentive to file - a chance to get a refund. The Unity Council's Clarissa Johnson says another reason is, if a person winds up in immigration court, a record of having filed taxes is considered evidence of good moral character.

JOHNSON: And especially if they're working toward their citizenship, it's something that can show that they are here for the long haul.

GONZALES: According to the Taxpayer Advocate Service, an office of the IRS, ITIN filers last year paid almost $24 billion in federal taxes.

Yet as the Trump administration cracks down on illegal immigration, there's some anecdotal evidence that fewer immigrants using ITINs are choosing to file their taxes this year.

Max Moy-Borgen runs the tax program at the Mission Economic Development Agency in San Francisco. It's one of the largest free tax preparation programs in the country.

MAX MOY-BORGEN: Many of our clients are telling us that in years past, they felt more hope and more of ability to have a pathway towards citizenship. And lately, there's a lot less hope.

GONZALES: Overall, tax service providers in the San Francisco Bay Area say there's about a 20 percent decline in the number of people filing with ITINs.

There are similar reports from service providers in other areas of the country, says Francine Lipman. She teaches tax law at the University of Nevada.

FRANCINE LIPMAN: Sending in a tax return with your current address and information is very unnerving to a population that wants to comply with the law and is actually leaving significant refunds on the table by not filing tax returns.

GONZALES: Still, the IRS is barred from sharing its information with other government agencies, such as the Department of Homeland Security, except under limited circumstances. But Lipman says, many ITIN filers have to decide whether to trust that firewall. Richard Gonzales, NPR News, San Francisco.

(SOUNDBITE OF FLOEX'S "SANDALEK") Transcript provided by NPR, Copyright NPR.