I 

112TH CONGRESS 

1ST SESSION H. R. 3720 

To amend the Internal Revenue Code of 1986 to clarify that wages paid 

to unauthorized aliens may not be deducted from gross income, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 16, 2011 

Mr. KING of Iowa (for himself, Mr. GOHMERT, Mr. FRANKS of Arizona, Mr. 

ROHRABACHER, Mr. BURGESS, Mrs. MYRICK, Mr. GINGREY of Georgia, 

Mr. FLEMING, Mr. BROOKS, Mr. BILBRAY, Mrs. BLACKBURN, Mr. 

ROYCE, Mr. BURTON of Indiana, Mr. GRAVES of Georgia, Mr. 

BARLETTA, Mr. POSEY, Mr. BARTLETT, Mr. ROE of Tennessee, Mr. 

DESJARLAIS, Mr. NEUGEBAUER, Mr. MARINO, Mr. SENSENBRENNER, 

Mr. POE of Texas, and Mr. CHAFFETZ) introduced the following bill; 

which was referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each 

case for consideration of such provisions as fall within the jurisdiction of 

the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to clarify 

that wages paid to unauthorized aliens may not be deducted from gross income, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as— 


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1 (1) the ‘‘New IDEA Act’’; or 

2 (2) the ‘‘New Illegal Deduction Elimination 

3 Act’’. 

4 SEC. 2. CLARIFICATION THAT WAGES PAID TO UNAUTHOR5 IZED ALIENS MAY NOT BE DEDUCTED FROM 

6 GROSS INCOME. 

7 (a) IN GENERAL.—Subsection (c) of section 162 of 

8 the Internal Revenue Code of 1986 (relating to illegal 

9 bribes, kickbacks, and other payments) is amended by 

10 adding at the end the following new paragraph: 

11 ‘‘(4) WAGES PAID TO OR ON BEHALF OF UNAU12 THORIZED ALIENS.— 

13 ‘‘(A) IN GENERAL.—No deduction shall be 

14 allowed under subsection (a) for any wage paid 

15 to or on behalf of an unauthorized alien, as de16 fined under section 274A(h)(3) of the Immigra17 tion and Nationality Act (8 U.S.C. 

18 1324a(h)(3)). 

19 ‘‘(B) WAGES.—For the purposes of this 

20 paragraph, the term ‘wages’ means all remu21 neration for employment, including the cash 

22 value of all remuneration (including benefits) 

23 paid in any medium other than cash. 

24 ‘‘(C) SAFE HARBOR.—If a person or other 

25 entity is participating in the E-Verify Program 


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1 described in section 403(a) of the Illegal Immi2 gration Reform and Immigrant Responsibility 

3 Act of 1996 (8 U.S.C. 1324a note) and obtains 

4 confirmation of identity and employment eligi5 bility in compliance with the terms and condi6 tions of the program with respect to the hiring 

7 (or recruitment or referral) of an employee, 

8 subparagraph (A) shall not apply with respect 

9 to wages paid to such employee. 

10 ‘‘(D) BURDEN OF PROOF.—In the case of 

11 any examination of a return in connection with 

12 a deduction under this section by reason of this 

13 paragraph, the Secretary shall bear the burden 

14 of proving that wages were paid to or on behalf 

15 of an unauthorized alien. 

16 ‘‘(E) LIMITATION ON TAXPAYER AUDIT.— 

17 The Secretary may not commence an audit or 

18 other investigation of a taxpayer solely on the 

19 basis of a deduction taken under this section by 

20 reason of this paragraph.’’. 

21 (b) SIX-YEAR LIMITATION ON ASSESSMENT AND

22 COLLECTION.—Subsection (c) of section 6501 of the In23 ternal Revenue Code of 1986 (relating to exceptions) is 

24 amended by adding at the end the following new para25 graph: 


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1 ‘‘(12) DEDUCTION CLAIMED FOR WAGES PAID

2 TO UNAUTHORIZED ALIENS.—In the case of a return 

3 of tax on which a deduction is shown in violation of 

4 section 162(c)(4), any tax under chapter 1 may be 

5 assessed, or a proceeding in court for the collection 

6 of such tax may be begun without assessment, at 

7 any time within 6 years after the return was filed.’’. 

8 (c) USE OF DOCUMENTATION FOR ENFORCEMENT

9 PURPOSES.—Section 274A of the Immigration and Na10 tionality Act (8 U.S.C. 1324a) is amended— 

11 (1) in subparagraph (b)(5), by inserting ‘‘, sec12 tion 162(c)(4) of the Internal Revenue Code of 

13 1986,’’ after ‘‘enforcement of this Act’’; 

14 (2) in subparagraph (d)(2)(F), by inserting ‘‘, 

15 section 162(c)(4) of the Internal Revenue Code of 

16 1986,’’ after ‘‘enforcement of this Act’’; and 

17 (3) in subparagraph (d)(2)(G), by inserting 

18 ‘‘section 162(c)(4) of the Internal Revenue Code of 

19 1986 or’’ after ‘‘or enforcement of’’. 

20 (d) AVAILABILITY OF INFORMATION.— 

21 (1) IN GENERAL.—The Commissioner of Social 

22 Security, the Secretary of the Department of Home23 land Security, and the Secretary of the Treasury, 

24 shall jointly establish a program to share informa25 tion among such agencies that may or could lead to 


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1 the identification of unauthorized aliens (as defined 

2 under section 274A(h)(3) of the Immigration and 

3 Nationality Act), including any no-match letter, any 

4 information in the earnings suspense file, and any 

5 information in the investigation and enforcement of 

6 section 162(c)(4) of the Internal Revenue Code of 

7 1986. 

8 (2) DISCLOSURE BY SECRETARY OF THE

9 TREASURY.— 

10 (A) IN GENERAL.—Subsection (i) of sec11 tion 6103 of the Internal Revenue Code of 1986 

12 is amended by adding at the end the following 

13 new paragraph: 

14 ‘‘(9) PAYMENT OF WAGES TO UNAUTHORIZED

15 ALIENS.—Upon request from the Commissioner of 

16 the Social Security Administration or the Secretary 

17 of the Department of Homeland Security, the Sec18 retary shall disclose to officers and employees of 

19 such Administration or Department— 

20 ‘‘(A) taxpayer identity information of em21 ployers who paid wages with respect to which a 

22 deduction was not allowed by reason of section 

23 162(c)(4), and 

24 ‘‘(B) taxpayer identity information of indi25 viduals to whom such wages were paid, 


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1 for purposes of carrying out any enforcement activi2 ties of such Administration or Department with re3 spect to such employers or individuals.’’. 

4 (B) RECORDKEEPING.—Paragraph (4) of 

5 section 6103(p) of such Code is amended— 

6 (i) by striking ‘‘(5), or (7)’’ in the 

7 matter preceding subparagraph (A) and in8 serting ‘‘(5), (7), or (9)’’, and 

9 (ii) by striking ‘‘(5) or (7)’’ in sub10 paragraph (F)(ii) and inserting ‘‘(5), (7), 

11 or (9)’’. 

12 (e) EFFECTIVE DATE.— 

13 (1) Except as provided in paragraph (2), this 

14 Act and the amendments made by this Act shall 

15 take effect on the date of the enactment of this Act. 

16 (2) The amendments made by subsections (a) 

17 and (b) shall apply to taxable years beginning after 

18 December 31, 2011. 

19 SEC. 3. MODIFICATION OF E-VERIFY PROGRAM. 

20 (a) MAKING PERMANENT.—Subsection (b) of section 

21 401 of the Illegal Immigration Reform and Immigrant Re22 sponsibility Act of 1996 (8 U.S.C. 1324a note) is amended 

23 by striking the last sentence. 

24 (b) APPLICATION TO CURRENT EMPLOYEES.— 


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1 (1) VOLUNTARY ELECTION.—The first sentence 

2 of section 402(a) of such Act is amended to read as 

3 follows: ‘‘Any person or other entity that conducts 

4 any hiring (or recruitment or referral) in a State or 

5 employs any individuals in a State may elect to par6 ticipate in the E-Verify Program.’’. 

7 (2) BENEFIT OF REBUTTABLE PRESUMP8 TION.—Paragraph (1) of section 402(b) of such Act 

9 is amended by adding at the end the following: ‘‘If 

10 a person or other entity is participating in the E11 Verify Program and obtains confirmation of identity 

12 and employment eligibility in compliance with the 

13 terms and conditions of the program with respect to 

14 individuals employed by the person or entity, the 

15 person or entity has established a rebuttable pre16 sumption that the person or entity has not violated 

17 section 274A(a)(2) with respect to such individ18 uals.’’. 

19 (3) SCOPE OF ELECTION.—Subparagraph (A) 

20 of section 402(c)(2) of such Act is amended to read 

21 as follows: 

22 ‘‘(A) IN GENERAL.—Any electing person or 

23 other entity may provide that the election under 

24 subsection (a) shall apply (during the period in 

25 which the election is in effect)— 


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1 ‘‘(i) to all its hiring (and all recruit2 ment or referral); 

3 ‘‘(ii) to all its hiring (and all recruit4 ment or referral and all individuals em5 ployed by the person or entity); 

6 ‘‘(iii) to all its hiring (and all recruit7 ment or referral) in one or more States or 

8 one or more places of hiring (or recruit9 ment or referral, as the case may be); or 

10 ‘‘(iv) to all its hiring (and all recruit11 ment or referral and all individuals em12 ployed by the person or entity) in one or 

13 more States or one or more place of hiring 

14 (or recruitment or referral or employment, 

15 as the case may be).’’. 

16 (4) PROCEDURES FOR PARTICIPANTS IN E17 VERIFY PROGRAM.—Subsection (a) of section 403 of 

18 such Act is amended— 

19 (A) in the matter preceding paragraph (1), 

20 by inserting ‘‘or continued employment in the 

21 United States’’ after ‘‘United States’’; and 

22 (B) in paragraph (3)— 

23 (i) in subparagraph (A), by striking 

24 all that follows ‘‘(as specified by the Sec25 retary of Homeland Security)’’ and insertVerDate Mar 15 2010 20:28 Dec 23, 2011 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3720.IH H3720

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1 ing ‘‘after the date of the hiring, or re2 cruitment or referral, in the case of inquir3 ies made pursuant to a hiring, recruitment 

4 or referral (and not of previously hired in5 dividuals).’’; and 

6 (ii) in subparagraph (B), by striking 

7 ‘‘such 3 working days’’ and inserting ‘‘the 

8 specified period’’. 

9 (c) APPLICATION TO JOB APPLICANTS.—Section 

10 402(c)(2) of such Act is amended by adding at the end 

11 the following: 

12 ‘‘(C) JOB OFFER MAY BE MADE CONDI13 TIONAL ON FINAL CONFIRMATION BY E14 VERIFY.—A person or other entity that elects to 

15 participate in the E-Verify Program may offer 

16 a prospective employee an employment position 

17 conditioned on final verification of the identity 

18 and employment eligibility of the employee 

19 using the employment eligibility confirmation 

20 system established under section 404.’’. 

Æ 


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