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National Data | Feds Shrug At Employer-Sponsored Immigration Fraud
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August 25, 2004, 05:00 AM
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The 9/11 Commission found that if the CIA and FBI had shared information, the disaster might have been averted.

What a coincidence. A strikingly similar failure of government agencies to co-operate in the immigration area was found by a recent U.S. Government Accountability Office study. The GAO presented its study to the U.S. Senate with the forbidding if functional title "Data Sharing and Analysis May Enhance Tax Compliance and Improve Immigration Eligibility Decisions." [PDF]

The problem: temporary guest workers and "employment-based preference" immigrants sponsored by employers. These classes enable employers to import high-tech specialists (H-1bs), professionals, seasonal workers, and other workers with skills deemed "unavailable in the United States." (Unavailable, that is, at the price these employers want to pay).

An astounding six hundred and fifty-six thousand temporary guest workers or trainees entered the U.S. in 2002—the year after 9/11, if you recall. (The data system used to tally temporary guest workers and trainees records each entry separately, so individuals who enter more than once during the course of the year are counted more than once. But, for perspective, almost 200,000 new H-1b visas were issued in 2002). Another 175,000 individuals received Green Cards i.e. became permanent U.S. residents. [Table 1.]

This figure for permanent residents includes spouses and children, and thus will likely soon result in more "Anchor Babies."

Within the Department of Homeland Security, the agency entrusted with vetting foreign-born workers and their sponsors is the Citizenship and Immigration Services (CIS). When GAO auditors examined a sample of businesses applying to CIS to sponsor immigrant workers over the 1997 to 2004 period, this is what they found:

  • 16 percent (67,949 of the 413,723 businesses sampled) did not file tax returns

 

  • 5 percent (19,972 businesses) were unknown to the IRS

 

  • 4.6 percent (18,942 businesses) had unpaid tax assessments at the time of application

According to the IRS, these sponsors may not be required to file for a variety of reasons, including insufficient income. But non-filing does cast doubt as to whether a business meets the financial viability (ability to pay wages) and the legitimacy (proof of existence) tests for sponsoring an immigrant. And, of course, non-filers may simply be frauds.

Tax delinquents and businesses that are completely unknown to the IRS, needless to say, are obvious candidates for both tax and immigration fraud.

If they exist at all.

Because, according to immigration agency testimony to Congress, many sponsoring businesses have long been known to be bogus. Some are immigration entrepreneurs operating out of post office boxes, private homes, or apartments. Such "companies" often act as employment agencies, petitioning for foreign workers and then trying to place them with fee-paying employers. These scams are perpetrated both with and without the foreign worker`s advance knowledge. (Lincoln Kahn detailed one such fraud in VDARE.COM on May 1st.]

This problem is not confined to small businesses. The GAO study found one company sponsored more than 600 workers from 1997 to 2004 but is currently delinquent on 12 tax returns for $8 million, and failed to file 3 income tax returns.

Overall, the unpaid tax assessments of immigrant sponsors totaled $5.6 billion, according to GAO.

Foreign-born workers themselves must meet certain criteria in order to qualify for immigrant status. In testing for "good moral character," for example, CIS asks applicants whether they have ever been imprisoned or failed to file a tax return. Obviously, this is critically important if a temporary worker is applying for permanent status—or if illegal immigrants are amnestied. Yet no IRS data is made available to CIS to corroborate the applicant`s response.

Nor is IRS data made available to corroborate the sponsoring employers` bona fides.

Federal law currently forbids such an exchange on the grounds of taxpayer confidentiality. There are precedents for sharing data, however. The Social Security Administration (SSA) has had an extensive data sharing program with IRS for 30 years, using tax data to verify beneficiary earnings and eligibility.

Inescapable conclusion: to official Washington, administering a tax-and-spend program like Social Security is simply more important than controlling immigration—or even national security.

[Number fans click here for tables.]

Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants in Indianapolis.