“Hola, mucho gusto,” I said to the young man in front of me. “Hello, glad to meet you,” it meant in English.
I was a volunteer tax preparer at the Hispanic Community Center in Milwaukee and many of the men waiting in the outside assembly room were undocumented, or illegals, yet they were here for help preparing their income tax returns.
The IRS Targeted Illegal Alien Income in 1996
It was 1998. In 1996, the IRS realized many undocumented aliens were making money in the United States but not paying taxes on their income. The IRS came up with something new: Individual Taxpayer Identification Numbers (ITINs) for “those who cannot qualify for a Social Security Number.” This was government-speak, in most cases, for individuals in the United States illegally. (Other legal immigrants also may have ITINs instead of SSNs, but I will not go into those exceptions here.)
ITINs have the same format as SSNs: xxx-xx-xxxx, except ITINs always begin with the number 9. SSNs do not begin with 9.
The Human Face of an ITIN
The gentleman in front of me smiled slightly as he handed me his card with the ITIN number and his name on it, along with the 1099 form for self-employment. He worked for a landscaping company.
Most low income clients look forward to the tax refund they will receive and perhaps the Earned Income Credit. As we worked through the 1040 form together, I could see this gentleman was going to owe taxes…and quite a bit, too.
I asked him, didn’t he have a spouse or children he could claim as dependents? He looked down at the floor as he explained, “No aqui,” or “not here.” Later, another tax preparer explained his family was probably in Mexico and he sent money back home for them, but could not claim them.
Giving the Bad News
I felt a bit heartsick as I told him the amount he owed, but he wasn’t fazed. He was prepared to pay it, and even tried to give me a couple of dollars as a thank you. I assured him the service was “gratis,” or free, but he left the money in the box to support the work of the Hispanic Community Center.
I marveled at this hard working man with callused hands and dirt under his nails, who so willingly paid his “fair share” of income taxes.
He was the first in a line of young men who came in with ITINs, filled out their forms, and understood they would not receive a refund but instead owed. They wanted to be like other Americans. They were grateful.
If You are on Social Security
I learned more about ITINs after that. According to the American Immigration Council, in 2010, more than three million people paid over $870 million in income taxes using an ITIN, and according to the IRS, ITIN filers pay $9 billion in payroll taxes annually.
So if you are a senior citizen on Social Security, those $9 billion in payroll taxes are helping you to receive your monthly checks. Yet the Social Security Administration does not track payroll taxes paid by ITIN holders, so their payments will not count toward their own retirement income.
This was confirmed by the American Immigration Council, which stated ITIN holders are not eligible for all of the tax benefits and public benefits that U.S. citizens and other taxpayers can receive. For example, an ITIN holder is not eligible for Social Security benefits or the Earned Income Tax Credit (EITC).
Do ITINs Help the Government Track Illegal Immigrants?
You might think the ITIN is a way for the government to track undocumented immigrants. But the IRS realized they would not achieve tax compliance if immigrants felt they were being tracked. Therefore, the law was written to require the IRS not share the ITIN applicant’s private information with immigration enforcement agencies.
Paying Taxes is the American Way
When the day was over, I walked past the community room where many Hispanic people, documented and undocumented, some with SSNs, some with ITINs, still waited to have their taxes prepared. It was an honorable thing for them. They would come back another day, to be part of the American way.