New Illegal Deduction Elimination Act

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. Short title This Act may be cited as— (1) the New IDEA Act (2) the New Illegal Deduction Elimination Act 2. Clarification that wages paid to unauthorized aliens may not be deducted from gross income (a) In general Subsection (c) of section 162 (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 (C) Safe Harbor If a person or other entity is participating in the E–Verify Program described in section 403(a) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ( 8 U.S.C. 1324a (D) Burden of proof In the case of any examination of a return in connection with a deduction under this section by reason of this paragraph, the Secretary shall bear the burden of proving that wages were paid to or on behalf of an unauthorized alien. (E) Limitation on taxpayer audit The Secretary may not commence an audit or other investigation of a taxpayer solely on the basis of a deduction taken under this section by reason of this paragraph. . (b) Six-Year limitation on assessment and collection Subsection (c) of section 6501 (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 (1) in subparagraph (b)(5), by inserting , section 162(c)(4) enforcement of this Act (2) in subparagraph (d)(2)(F), by inserting , section 162(c)(4) enforcement of this Act (3) in subparagraph (d)(2)(G), by inserting section 162(c)(4) of the Internal Revenue Code of 1986 or 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) (2) Disclosure by Secretary of the Treasury (A) In general Subsection (i) of section 6103 (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) (5), (7), or (9) (ii) by striking (5) or (7) (5), (7), or (9) (e) Effective date (1) Except as provided in paragraph (2), this Act and the amendments made by this Act shall take effect on the date of the enactment of this Act. (2) The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 2018. 3. Modification of E–Verify Program (a) Making permanent Subsection (b) of section 401 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ( 8 U.S.C. 1324a (b) Application to current employees (1) Voluntary election The first sentence of section 402(a) of such Act is amended to read as follows: Any person or other entity that conducts any hiring (or recruitment or referral) in a State or employs any individuals in a State may elect to participate in the E–Verify Program. (2) Benefit of rebuttable presumption Paragraph (1) of section 402(b) of such Act is amended by adding at the end the following: If a person or other entity is participating in the E–Verify Program and obtains confirmation of identity and employment eligibility in compliance with the terms and conditions of the program with respect to individuals employed by the person or entity, the person or entity has established a rebuttable presumption that the person or entity has not violated section 274A(a)(2) with respect to such individuals. (3) Scope of election Subparagraph (A) of section 402(c)(2) of such Act is amended to read as follows: (A) In general Any electing person or other entity may provide that the election under subsection (a) shall apply (during the period in which the election is in effect)— (i) to all its hiring (and all recruitment or referral); (ii) to all its hiring (and all recruitment or referral and all individuals employed by the person or entity); (iii) to all its hiring (and all recruitment or referral) in one or more States or one or more places of hiring (or recruitment or referral, as the case may be); or (iv) to all its hiring (and all recruitment or referral and all individuals employed by the person or entity) in one or more States or one or more place of hiring (or recruitment or referral or employment, as the case may be). . (4) Procedures for participants in E–Verify Program Subsection (a) of section 403 of such Act is amended— (A) in the matter preceding paragraph (1), by inserting or continued employment in the United States United States (B) in paragraph (3)— (i) in subparagraph (A), by striking all that follows (as specified by the Secretary of Homeland Security) after the date of the hiring, or recruitment or referral, in the case of inquiries made pursuant to a hiring, recruitment or referral (and not of previously hired individuals). (ii) in subparagraph (B), by striking such 3 working days the specified period (c) Application to job applicants Section 402(c)(2) of such Act is amended by adding at the end the following: (C) Job offer may be made conditional on final confirmation by E–Verify A person or other entity that elects to participate in the E–Verify Program may offer a prospective employee an employment position conditioned on final verification of the identity and employment eligibility of the employee using the employment eligibility confirmation system established under section 404. .

Summary: New IDEA Act or the New Illegal Deduction Elimination Act This bill denies a tax deduction for wages and benefits paid to or on behalf of an unauthorized alien. The bill also extends to six years the period for assessing and collecting underpayments of tax due to deductions claimed for wages paid to unauthorized aliens. The Social Security Administration (SSA), the Department of Homeland Security (DHS), and the Department of the Treasury must jointly establish a program to share information that may lead to the identification of unauthorized aliens. Treasury must provide information to DHS and the SSA regarding employers who paid nondeductible wages to unauthorized aliens and the aliens to whom such wages were paid. The bill amends the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 to (1) make permanent the E-Verify Program for verifying the employment eligibility of alien workers, (2) apply such program to current employees in addition to new hires, (3) establish a rebuttable presumption that employers who participate in the E-Verify Program and obtain confirmation of identity and employment eligibility have not violated hiring requirements under such Act, and (4) allow employers participating in the E-Verify Program to make a conditional offer of employment pending final verification of the identity and employment eligibility of the job applicant.