ABANDONED IRS SECRECY COULD COST U.S., CALIFORNIA BILLIONS

 

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MAY 13, 2025 OR THEREAFTER

BY THOMAS D. ELIAS
“ABANDONED IRS SECRECY COULD COST U.S., CALIFORNIA BILLIONS”

 

It seemed simple enough the other day when the Internal Revenue Service issued a brief statement saying it will now share addresses and other tax return data with immigration enforcement agencies.

 

This marked the first time the IRS has explicitly broken a promise of confidentiality (except when federal criminal warrants have been issued) for all tax information submitted to it.

 

It might cost the federal treasury billions of dollars, not to mention messing up longstanding sources of Social Security cash and state tax revenue.

 

For one of the dirty little secrets of undocumented immigrants is that millions of them have yearly filed tax returns just like U.S. citizens and other legal residents. They have also contributed billions of dollars over many decades to Social Security accounts they will never be able to access, as payments have never been available to the undocumented.

 

This means whatever they contribute goes toward paying everyone else, one factor that has staved off bankruptcy for the Social Security system many years longer than was predicted by some in the later years of the 20^th Century.

 

It’s not that illegal immigrants have always filed tax returns completely identical to those of citizens. For one thing, most of the undocumented file tax returns using individual taxpayer identification numbers rather than Social Security numbers, as most citizen taxpayers do.

 

California was home to about 1.8 million unauthorized residents in 2022. Those immigrants made up about 7 percent of the state’s work force and accounted for at least half of all farm workers, according to the Pew Research Center.

 

But immigrant rights groups say fear is rampant today among the undocumented – and even among many who hold valid visas. They have seen individuals seized on sidewalks and sent quickly to detention centers thousands of miles away.

 

Now many who have filed and paid both federal and state taxes wonder whether they should keep doing so. No one knows yet the precise number of unauthorized residents who let the April 15 tax deadline go by without responding.

 

If they all stopped filing, California would lose an estimated $8.5 billion in state income tax money that’s usually paid in simultaneously with federal taxes that go to the IRS. Losing another $8-plus billion from a budget that has been strapped for several years, as state general fund has gotten by partly with gimmicks and borrowing from funds earmarked for specific purposes, would likely cause major cuts to state programs from parks to public hospitals and schools.

 

“This will be detrimental not just to California, but in many other states,” said one pro-immigrant activist.

 

California’s senior U.S. senator, Alex Padilla, called the retreat from secrecy “a complete betrayal of the federal government’s decades-long commitment to never weaponize taxpayer information for political purposes…(It) could cost billions in lost tax revenue for states and the federal government.”

 

But some who considered not paying taxes this year out of fear soon realized that any information they suddenly withheld would not offer them much protection. That’s because the IRS has years of older returns on hand, most containing similar information.

 

Immigrant advocates say this led a healthy percentage of undocumented taxpayers to go ahead and file anyway, figuring they might use the filing in later immigration court hearings as proof of voluntary positive contributions to this country. Such an argument does not figure to spare deportation for those nabbed by federal immigration agents.

 

Then there’s the cost of the deportations themselves. The Washington, D.C.-based American Immigration Council said in a springtime report that the cost of a comprehensive mass deportation operation of 13 million of the undocumented would cost the federal government at least $315 billion. If deportations were conducted at 1 million a year, the group said costs would come to at least $88 billion per year.

 

Those costs are unrelated to lost income tax revenues, which may already be felt at the IRS itself, where about 5,000 agents have resigned or retired this year, while 7,000 probationary employees were laid off.

 

Nor does anyone know how many “mixed” families featuring both legal residents and the undocumented have opted out of paying taxes.

 

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    Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net