NCPA - National Center for Policy Analysis

Many Illegals Filing Taxes Anonymously

April 16, 2001

Many undocumented workers are paying income, property and sales taxes -- while using false Social Security numbers to avoid detection by the Immigration and Naturalization Service. As a result, some workers are paying Social Security, Medicare, unemployment compensation and other taxes, but not receiving credit for their tax payments.

No one can say for certain how much the government is collecting from the payments because the Internal Revenue Service does not follow up the paper trail. But the evidence that this is occurring stems from a rapidly-growing file at Social Security. That file consists of contributions it can't trace.

  • Many illegals in the restaurant, agricultural and construction trades give employers fake Social Security numbers -- and when their employers submit withholdings to the federal government, their source cannot be identified.
  • Illegal immigrants eligible for a tax refund are often willing to forgo it to keep their identity secret.
  • The amount of Social Security taxes collected on income generated by suspended W-2s -- wage reports for which a person's name or Social Security number cannot be matched to Social Security records -- rose from $1.2 billion in 1990 to nearly $4 billion in 1998.
  • Over the eight-year period, the mystery workers and their employers paid more than $20 billion in Social Security taxes -- which weren't credited to them.

Nearly half the workers in the "suspense" file were employed by three industries that are believed to hire many illegal immigrants -- agriculture, restaurants and bars, and low-skilled services such as janitorial companies.

Source: Mary Beth Sheridan, "Illegals Paying Millions in Taxes," Washington Post, April 15, 2001.


Browse more articles on Government Issues