To make the E-verify program permanent, and to provide for penalties to enforce compliance with the program, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Jobs Recovery by Ensuring a Legal 
American Workforce Act of 2011''.

SEC. 2. E-VERIFY MADE PERMANENT AND MANDATORY.

    (a) Program Made Permanent.--Section 401(b) of the Illegal 
Immigration Reform and Immigrant Responsibility Act of 1996 (8 U.S.C. 
1324a note) is amended by adding before the period at the end of the 
last sentence the following: ``, except that the basic pilot program 
described in section 403(a) shall be a permanent program''.
    (b) Program Made Mandatory.--Section 402 of such Act is amended--
            (1) in subsection (a) by inserting ``or subsection (g)'' 
        after ``in subsection (e)'';
            (2) in subsection (e) by inserting after ``require under 
        this subsection'' the following: ``or under subsection (g)''; 
        and
            (3) by adding at the end the following:
    ``(g) E-Verify Program Made Mandatory.--Subject to subsection 
(c)(3), any person or other entity that conducts any hiring (or 
recruitment or referral) in a State in which the E-Verify program 
described under section 403(a) is operating shall elect to participate 
in such program. The Secretary of Homeland Security shall ensure that 
verification by means of a toll-free telephone line is an available 
option in complying with the preceding sentence.''.
    (c) Transition Period; Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by subsection (b) shall take effect beginning 
        on the date that is 2 years after the date of enactment of this 
        Act.
            (2) Certain entities.--The amendments made by subsection 
        (b) shall take effect beginning on the date that is--
                    (A) 540 days after the date of enactment of this 
                Act, in the case of a person or entity that employs 100 
                or more individuals in the United States; and
                    (B) 1 year after the date of enactment of this Act, 
                in the case of--
                            (i) a contractor that--
                                    (I) has entered into a contract 
                                with the Federal Government to which 
                                section 2(b)(1) of the Service Contract 
                                Act of 1965 (41 U.S.C. 351(b)(1)) 
                                applies, and any subcontractor under 
                                such contract; or
                                    (II) has entered into a contract 
                                exempted from the application of such 
                                Act by section 6 of such Act (41 U.S.C. 
                                356), and any subcontractor under such 
                                contract; or
                            (ii) any person or entity that employs more 
                        than 250 individuals in the United States.
    (d) Application to Current Employees.--Every person or entity that 
employs one or more persons in the United States shall verify through 
the E-Verify program by not later than the applicable effective date in 
(c) that each employee is authorized to work in the United States.
    (e) Rule of Construction.--Nothing in the amendments made by this 
section shall be construed to prevent a person or other entity that is 
not required to participate in the E-Verify program described in 
section 403(a) from voluntarily participating in such program.
    (f) No Limitation on Participation by State or Local Law.--No State 
or local government may prohibit a person or other entity from using 
the E-verify program to verify the employment authorization of new 
hires or current employees.
    (g) Document Fraud Study.--The Government Accountability Office 
shall conduct a study to examine methods to combat document fraud, 
theft and forgery in the use and expansion of the E-Verify program. The 
report shall make recommendations to the appropriate agencies on ways 
to reduce instances of document fraud, theft, and forgery. The report 
shall be published within six months after enactment of this Act.

SEC. 3. ENHANCING MONITORING OF AND COMPLIANCE WITH E-VERIFY PROGRAM.

    The Secretary of the Department of Homeland Security is authorized 
to take the following actions to increase the capability and 
effectiveness of the E-Verify employer Monitoring and Compliance team 
within the Citizenship and Immigration Services:
            (1) Increase by no more than 6 the number of fulltime 
        employees dedicated to the development of thresholds and 
        algorithms and quality assurance procedures for the monitoring 
        of employer adherence to the conditions that are currently 
        outlined in the E-Verify Memorandum of Understanding.
            (2) Increase as necessary the number of fulltime employees 
        dedicated to outreach to employers using the E-Verify program 
        and the creation of informational tools and corrective action 
        procedures that will provide compliance assistance to these 
        employers. These employees may also be utilized in the 
        operation of the toll-free compliance assistance call center.
            (3) Establish procedures for the identification of cases of 
        potential fraud or misuse of the E-Verify program.
            (4) Establish procedures for the sharing of information on 
        these selected cases with Immigration and Customs Enforcement 
        for further investigation as necessary.
            (5) Report to the Congress within one year of the date of 
        enactment of this Act on the activities of the Office of 
        Monitoring and Compliance which shall include--
                    (A) a description of the types of fraud and misuse 
                being detected by the thresholds and algorithms used 
                for employee monitoring within the Office;
                    (B) the number and type of cases flagged by the 
                Office and referred to Immigration and Customs 
                Enforcement, as well as the outcome of these cases; and
                    (C) an assessment of the number and the nature of 
                calls received by the compliance assistance call 
                center.

SEC. 4. MANDATORY NOTIFICATION OF SSN MISMATCHES AND MULTIPLE USES.

    (a) Notification of Multiple Uses of Individual Social Security 
Account Numbers.--Prior to crediting any individual with concurrent 
wages from more than one employer, the Commissioner of Social Security 
shall notify the individual that wages from two or more employers are 
being reported under the individual's social security account number 
(hereinafter in this Act referred to as ``SSN''). Such notice shall 
include, at a minimum--
            (1) the name and location of each employer reporting 
        benefits for an individual;
            (2) a warning that any inaccuracies in this information 
        could indicate that the individual's SSN is being fraudulently 
        used by another individual;
            (3) an explanation of any potential risk that an individual 
        is subject to if his or her SSN has been used or is being used 
        by someone else; and
            (4) a toll-free telephone number that an individual may 
        call to report inaccuracies in the use of their SSN.
    (b) Information Sharing With the Department of Homeland Security.--
            (1) Not later than 180 days following the date of enactment 
        of this Act, the Commissioner of Social Security shall 
        promulgate regulations in accord with section 1106 of the 
        Social Security Act (42 U.S.C. 1306), to require that 
        information regarding all multiple use notifications that lead 
        to the identification of an unauthorized user of a SSN be 
        shared with the Secretary of the Department of Homeland 
        Security on a timely basis.
            (2) Information to be shared with the Secretary shall 
        include, at a minimum, the name and mailing address of all 
        employees who are the subject of an unresolved mismatch 
        notification or who are unauthorized users of another 
        individual's SSN. The names and addresses of the employers of 
        these employees must also be provided.
            (3) The Secretary shall report to the Congress annually the 
        number of cases that the Commissioner of Social Security has 
        shared with the Department of Homeland Security regarding 
        unauthorized users of an SSN and the actions that have been 
        taken to resolve these cases. The Secretary shall submit the 
        first report to the Congress not later than 1 year after the 
        date of enactment of this Act.
    (c) Information Sharing With the States.--The Department of 
Homeland Security shall report to the agency within each State that 
administers unemployment benefits of jobs that have potentially been 
made available by evidence of an employee being dismissed for non-
confirmation through the E-Verify program. Such notification shall 
include the name and address of the employer, a job description if 
available, and shall be made within 3 business days of final non-
confirmation.
    (d) Information Sharing With the Public.--The Department of 
Homeland Security shall prominently display on the Internet home page 
of the E-Verify program as ``Recovered Jobs'' the total number of jobs 
by month and year reported to the states under (c); and a link to the 
total number of jobs reported to each state by month and year.

SEC. 5. PENALTY FOR FAILURE TO FILE CORRECT INFORMATION RETURNS.

    (a) In General.--Section 6721 of the Internal Revenue Code of 1986 
(26 U.S.C. 6721) is amended by adding at the end the following:
    ``(g) Most Egregious Noncompliant Employer.--Notwithstanding any 
other provision of this section, in the case of a most egregious 
noncompliant employer, as designated for any taxable year by the Social 
Security Administration, the penalty for any failure described in this 
subsection with respect to an information return with respect to such 
taxable year shall be the maximum allowable penalty under this section 
for such failure.
    ``(h) Penalty Structure With Respect to Employing an Alien Not 
Authorized To Be Employed.--In the case of a failure described in 
subsection (a)(2) with respect to any person employing an alien not 
authorized to be so employed, the penalty under this section shall be 
determined in accordance with the following table:


------------------------------------------------------------------------
                                                  Not less     Not more
              ``In the case of--                   than--       than--
------------------------------------------------------------------------
The first offense.............................       $2,500       $5,000
The second offense............................       $7,500      $15,000
The third and subsequent offenses.............      $25,000  $50,000.''.
------------------------------------------------------------------------

    (b) Effective Date.--The amendment made by this section shall apply 
to failures occurring after the date of the enactment of this Act.

SEC. 6. CLARIFICATION THAT WAGES PAID TO UNAUTHORIZED ALIENS MAY NOT BE 
              DEDUCTED FROM GROSS INCOME.

    (a) Denial of Deduction.--Subsection (c) of section 162 of the 
Internal Revenue Code of 1986 (relating to illegal bribes, kickbacks, 
and other payments) is amended by adding at the end the following new 
paragraph:
            ``(4) Wages paid to or on behalf of unauthorized aliens.--
                    ``(A) In general.--No deduction shall be allowed 
                under subsection (a) for any wage paid to or on behalf 
                of an unauthorized alien, as defined under section 
                274A(h)(3) of the Immigration and Nationality Act (8 
                U.S.C. 1324a(h)(3)).
                    ``(B) Wages.--For the purposes of this paragraph, 
                the term wages means all remuneration for employment, 
                including the cash value of all remuneration (including 
                benefits) paid in any medium other than cash.
                    ``(C) Safe harbor.--If a person or other entity is 
                participating in the basic pilot program described in 
                section 403 of the Illegal Immigration Reform and 
                Immigrant Responsibility Act of 1996 (8 U.S.C. 1324a 
                note) and obtains confirmation of identity and 
                employment eligibility in compliance with the terms and 
                conditions of the program with respect to the hiring 
                (or recruitment or referral) of an employee, 
                subparagraph (A) shall not apply with respect to wages 
                paid to such employee.''.
    (b) Six-Year Limitation on Assessment and Collection.--Subsection 
(c) of section 6501 of such Code (relating to exceptions) is amended by 
adding at the end the following new paragraph:
            ``(12) Deduction claimed for wages paid to unauthorized 
        aliens.--In the case of a return of tax on which a deduction is 
        shown in violation of section 162(c)(4), any tax under chapter 
        1 may be assessed, or a proceeding in court for the collection 
        of such tax may be begun without assessment, at any time within 
        6 years after the return was filed.''.
    (c) Use of Documentation for Enforcement Purposes.--Section 274A of 
the Immigration and Nationality Act (8 U.S.C. 1324a) is amended--
            (1) in subparagraph (b)(5), by inserting ``, section 
        162(c)(4) of the Internal Revenue Code of 1986,'' after 
        ``enforcement of this Act'';
            (2) in subparagraph (d)(2)(F), by inserting ``, section 
        162(c)(4) of the Internal Revenue Code of 1986,'' after 
        ``enforcement of this Act''; and
            (3) in subparagraph (d)(2)(G), by inserting ``section 
        162(c)(4) of the Internal Revenue Code of 1986 or'' after ``or 
        enforcement of''.
    (d) Availability of Information.--
            (1) In general.--The Commissioner of Social Security, the 
        Secretary of the Department of Homeland Security, and the 
        Secretary of the Treasury, shall jointly establish a program to 
        share information among such agencies that may or could lead to 
        the identification of unauthorized aliens (as defined under 
        section 274A(h)(3) of the Immigration and Nationality Act), 
        including any no-match letter, any information in the earnings 
        suspense file, and any information in the investigation and 
        enforcement of section 162(c)(4) of the Internal Revenue Code 
        of 1986.
            (2) Disclosure by secretary of the treasury.--
                    (A) In general.--Subsection (i) of section 6103 of 
                the Internal Revenue Code of 1986 is amended by adding 
                at the end the following new paragraph:
            ``(9) Payment of wages to unauthorized aliens.--Upon 
        request from the Commissioner of the Social Security 
        Administration or the Secretary of the Department of Homeland 
        Security, the Secretary shall disclose to officers and 
        employees of such Administration or Department--
                    ``(A) taxpayer identity information of employers 
                who paid wages with respect to which a deduction was 
                not allowed by reason of section 162(c)(4), and
                    ``(B) taxpayer identity information of individuals 
                to whom such wages were paid, for purposes of carrying 
                out any enforcement activities of such Administration 
                or Department with respect to such employers or 
                individuals.''.
                    (B) Recordkeeping.--Paragraph (4) of section 
                6103(p) of such Code is amended--
                            (i) by striking ``(5), or (7)'' in the 
                        matter preceding subparagraph (A) and inserting 
                        ``(5), (7), or (9)'', and
                            (ii) by striking ``(5) or (7)'' in 
                        subparagraph (F)(ii) and inserting ``(5), (7), 
                        or (9)''.
    (e) Effective Date.--
            (1) Denial of deduction.--The amendment made by subsection 
        (a) shall apply to amounts paid or incurred in taxable years 
        beginning after December 31, 2010.
            (2) Six-year limitation on assessment and collection.--The 
        amendment made by subsection (b) shall apply with respect to 
        returns for taxable years beginning after December 31, 2010.
            (3) Use of documentation for enforcement purposes.--The 
        amendments made by subsection (c) shall take effect on the date 
        of the enactment of this Act.
            (4) Availability of information.--The amendments made by 
        subsection (d) shall apply with respect to requests made for 
        taxable years beginning after December 31, 2010.

Summary: Jobs Recovery by Ensuring a Legal American Workforce Act of 2011- Amends the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 to make the E-Verify Program (Program) permanent and mandatory. Directs the Government Accountability Office (GAO) to conduct a study of methods to combat Program document fraud. Authorizes the Secretary of Homeland Security (DHS) to take specified actions to enhance the E-Verify employer monitoring and compliance team within US Citizenship and Immigration Services. Directs the Commissioner of Social Security (SSA) to: (1) to notify an individual that wages from two or more employers are being reported under the individual's social security account number (SSN), and (2) promulgate regulations to require that information regarding all multiple use notifications that lead to the identification of an unauthorized user of a SSN be shared with the Secretary. Directs DHS to: (1) report to the state agency that administers unemployment benefits regarding jobs that have potentially been made available by evidence of an employee being dismissed for Program non-confirmation, and (2) display on the Program's Internet home page as Recovered Jobs the total number of jobs by month and year reported to the states and a link to the total number of jobs reported to each state by month and year. Amends the Internal Revenue Code to: (1) penalize specified employers for failure to correct information returns. And (2) prohibit employers from deducting from gross income wages paid to unauthorized aliens, with an exception for an employer participating in the Program. Directs the Commissioner, the Secretary, and the Secretary of the Treasury to jointly establish a program to share information that may lead to the identification of unauthorized aliens. Directs the Secretary of the Treasury, upon request from the Commissioner or the Secretary, to disclose: (1) taxpayer identity information of employers who paid wages with respect to which a deduction was not allowed because of illegal payments or because of being paid to unauthorized aliens, and (2) taxpayer identity information of individuals to whom such wages were paid.