Illegal aliens who have entered the U.S. are increasingly avoiding filing federal tax returns after the Internal Revenue Service shared taxpayer information with immigration enforcement.
The New York Times reported the shift is raising concerns that fewer filings could reduce federal tax revenue and weaken long-standing compliance among those in the group who previously paid into the system.
For decades, many illegal aliens filed taxes using Individual Taxpayer Identification Numbers, or ITINs, both to comply with the law and to document their work history.
Those filings generated significant revenue, with estimates placing annual federal tax contributions from illegal aliens at about $60 billion.
The Yale Budget Lab projected that reduced compliance could result in about $300 billion in lost tax revenue over the next decade.
Early signs of the decline are already emerging as the tax deadline approaches.
At a Los Angeles tax assistance center, ITIN filers accounted for about 10% of clients this year, compared with roughly one-third in previous years.
Tax preparers in other parts of the country have reported similar drops after reports that immigration enforcement agencies sought access to IRS data.
The change marks a break from longstanding IRS practice that kept taxpayer information separate from immigration enforcement.
Former IRS Commissioner John Koskinen said the consequences for compliance were clear.
"Our job was to collect taxes owed, not enforce immigration laws," Koskinen said.
"It was clear to me that, if immigrants thought their information was going to be shared, many of them would quit filing their tax returns."
Many illegal aliens have taxes withheld from their paychecks through formal employment and file returns to recover refunds when they overpay.
If fewer returns are filed, some of that income may go unreported, reducing federal tax collections.
Some may also forgo refunds tied to overpayment, leaving money already paid into the system unclaimed.
Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.
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