How does the IRS handle tax payments from individuals with uncertain immigration status?

1. How the IRS lets undocumented or uncertain-status people pay taxes — the practical route people use

The IRS issues the Individual Taxpayer Identification Number (ITIN) to people who have a federal tax purpose but are ineligible for a Social Security number, and applicants must use Form W-7 to apply; the process was updated and clarified through 2021–2024 guidance to strengthen documentation and link ITIN issuance to legitimate tax filing needs, including requiring a tax return or qualifying exception with the application ^{[1] [7] [2]}. The ITIN is a 9-digit tax processing number, not an authorization to work or an immigration status indicator, and IRS guidance describes acceptable identity and foreign-status documents such as passports or national ID cards as well as special rules for dependents and for making estimated payments when an ITIN is pending ^{[2] [7]}. The IRS has tightened standards to prevent misuse while preserving a pathway for tax compliance.

2. Tax rules that decide whether someone is taxed as a resident or nonresident — why immigration status alone doesn't determine tax liability

IRS Publication 519 and related guidance distinguish tax residency for U.S. tax purposes by the green card test and the substantial presence test; people without clear immigration status are classified for tax purposes as resident or nonresident aliens based on those tests, and that classification drives filing form choice, tax rates, and allowable deductions ^{[3] [8]}. Nonresident aliens engaged in a U.S. trade or business must file Form 1040-NR and are taxed on effectively connected income, while certain U.S.-source passive income is taxed at a flat withholding rate unless reduced by treaty; residents are taxed on worldwide income and can claim broader credits and deductions ^{[9] [3]}. The IRS publishes explicit filing deadlines and compliance options to enable tax administration irrespective of immigration enforcement.

3. How much tax undocumented and uncertain-status workers actually pay — recent independent estimates

Multiple independent analyses estimate that undocumented immigrants paid roughly $96–$100 billion in federal, state, and local taxes in 2022, with about $59.4 billion to the federal government and the remainder to state and local coffers; those studies also report per-capita tax burdens and project larger revenues if work authorization expanded ^{[5] [6]}. Researchers highlight that over a third of these taxes are payroll taxes funding Social Security and Medicare — programs many of these workers cannot claim benefits from — creating a fiscal asymmetry where workers contribute to systems they largely cannot access ^[5]. Reuters’ fact check affirmed that noncitizens can and do pay taxes using ITINs and other mechanisms, countering claims that undocumented people do not contribute tax revenue ^[4].

4. Conflicting perspectives and policy stakes — revenue, labor markets, and immigration enforcement

Economists and advocates emphasize that taxing and authorizing work for undocumented immigrants would increase tax revenue and reduce informal employment practices, while others argue enforcement and immigration control are separate policy priorities; the data-driven tradeoff is clear: greater legal authorization tends to raise reported wages and tax collections, whereas deportation or mass enforcement would reduce labor supply and state and local revenues ^{[6] [5]}. Studies projecting an additional $40.2 billion in taxes with universal work authorization illustrate the fiscal side of legalization debates, but policy choices also carry labor market, public service, and enforcement implications that extend beyond immediate revenue figures ^[6]. Stakeholders sometimes emphasize selective findings — revenue gains or rule integrity — to advance differing agendas.

5. What the IRS does not do and what taxpayers should know — limits and protections

The IRS does not determine immigration status nor share tax-payment information for immigration enforcement as a primary function; the tax system’s core mandate is revenue collection and administration, and ITINs and filing rules are designed to collect taxes while maintaining confidentiality and tax law consistency ^{[2] [8]}. Individuals should follow IRS application procedures, attach required documentation or file under exceptions, and choose the correct form (1040-NR or resident return) based on residency tests; the agency’s revisions in 2021–2024 aim to reduce fraud while preserving access for eligible filers ^{[1] [7]}. Policymakers and enforcement actors remain divided about whether to link tax compliance more directly to immigration outcomes, but current IRS practice separates tax administration from immigration adjudication.