Fact check: Why are illegal immigrants allowed to file tax returns in the us?

1. Summary of the results

The question about why illegal immigrants are "allowed" to file tax returns reveals a complex tax compliance system that operates independently of immigration status. Undocumented immigrants contribute significantly to government revenue, paying an estimated $96.7 billion in federal, state, and local taxes in 2022 ^{[1] [2]}. Of this amount, $59.4 billion went to the federal government and $37.3 billion to state and local governments ^[2].

The tax system allows undocumented immigrants to file returns primarily through the Individual Taxpayer Identification Number (ITIN) system, which enables tax compliance regardless of legal status. However, recent policy changes have created new complications. The Department of Homeland Security has agreed to share certain tax information filed by undocumented taxpayers with Immigration and Customs Enforcement ^[1], which could potentially lead to identification and deportation.

A federal judge refused a preliminary injunction in a lawsuit filed by nonprofit groups, allowing the IRS to continue sharing immigrants' tax data with ICE for deportation purposes ^[3]. This represents a win for the Trump administration and establishes that information-sharing must follow strict limitations ^[3].

2. Missing context/alternative viewpoints

The original question frames tax filing by undocumented immigrants as something that shouldn't be "allowed," but several crucial perspectives are missing:

Economic Benefits Perspective: Undocumented immigrants face a harsher tax code than legal residents and are often barred from participating in programs they pay taxes to fund ^[2]. If granted legal status, their tax contributions could increase by an estimated $40.2 billion in tax revenue ^[2]. Government agencies and fiscal conservatives benefit from this narrative as it demonstrates significant revenue generation.

Enforcement vs. Revenue Trade-off: The new IRS-ICE information sharing agreement may deter undocumented immigrants from filing taxes due to fear of deportation ^[4]. This could result in significant revenue losses for the federal government as tax compliance decreases ^[5]. Treasury officials and revenue-dependent programs would benefit from maintaining the current filing system.

Legal Compliance Paradox: Failing to file taxes can have serious consequences, including penalties and negative impacts on immigration cases, while a history of tax compliance can serve as a strong record in immigration cases ^[6]. Immigration attorneys and their clients benefit from maintaining tax compliance despite deportation risks.

Policy Restrictions: Recent legislation aims to end taxpayer-funded benefits for illegal immigrants, including access to Obamacare's premium tax credits, and requires anyone claiming a refundable tax credit to provide a Social Security Number ^[7]. Additionally, HHS has announced a policy shift to restore compliance with federal law and ensure that taxpayer-funded program benefits are not diverted to subsidize illegal aliens ^[8].

3. Potential misinformation/bias in the original statement

The original question contains several problematic assumptions:

False Premise of "Allowance": The question implies that undocumented immigrants filing taxes is an inappropriate policy choice, when in reality the tax system operates independently of immigration status and generates substantial government revenue ^{[1] [2]}.

Overlooked Financial Reality: The question ignores that undocumented immigrants pay an average effective state and local tax rate of 8.9% ^[2], contributing billions annually to government operations and services.

Missing Enforcement Context: The question fails to acknowledge that ICE can now request tax information from the IRS for individuals with final orders of deportation or those being investigated for criminal activity ^[4], showing that the system already includes enforcement mechanisms.

Ignoring Compliance Incentives: The framing overlooks that tax filing creates a paper trail that can actually serve as evidence of good faith compliance in immigration proceedings ^[6], making it beneficial for both immigrants and the legal system.

The question's framing suggests that tax filing by undocumented immigrants is problematic, when the evidence shows it generates substantial revenue while creating enforcement opportunities for immigration authorities.