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 addi-
tion to the Committees on the Judiciary and Education and the Work-
force, 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 de-
ducted from gross income, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as— 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS
(1) the ‘‘New IDEA Act’’; or 
(2) the ‘‘New Illegal Deduction Elimination 
Act’’. 
SEC. 2. CLARIFICATION THAT WAGES PAID TO UNAUTHOR-
IZED ALIENS MAY NOT BE DEDUCTED FROM 
GROSS INCOME. 
(a) IN GENERAL.—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 UNAU-
THORIZED 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 de-
fined under section 274A(h)(3) of the Immigra-
tion 
and 
Nationality 
Act 
(8 
U.S.C. 
1324a(h)(3)). 
‘‘(B) WAGES.—For the purposes of this 
paragraph, the term ‘wages’ means all remu-
neration 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 E-Verify Program 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS
described in section 403(a) of the Illegal Immi-
gration Reform and Immigrant Responsibility 
Act of 1996 (8 U.S.C. 1324a note) and obtains 
confirmation of identity and employment eligi-
bility in compliance with the terms and condi-
tions 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. 
‘‘(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 of the In-
ternal Revenue Code of 1986 (relating to exceptions) is 
amended by adding at the end the following new para-
graph: 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS
‘‘(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 Na-
tionality Act (8 U.S.C. 1324a) is amended— 
(1) in subparagraph (b)(5), by inserting ‘‘, sec-
tion 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 Home-
land Security, and the Secretary of the Treasury, 
shall jointly establish a program to share informa-
tion among such agencies that may or could lead to 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS
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 sec-
tion 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 Sec-
retary shall disclose to officers and employees of 
such Administration or Department— 
‘‘(A) taxpayer identity information of em-
ployers 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 indi-
viduals to whom such wages were paid, 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS
for purposes of carrying out any enforcement activi-
ties of such Administration or Department with re-
spect 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 in-
serting ‘‘(5), (7), or (9)’’, and 
(ii) by striking ‘‘(5) or (7)’’ in sub-
paragraph (F)(ii) and inserting ‘‘(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, 2011. 
SEC. 3. MODIFICATION OF E-VERIFY PROGRAM. 
(a) MAKING PERMANENT.—Subsection (b) of section 
401 of the Illegal Immigration Reform and Immigrant Re-
sponsibility Act of 1996 (8 U.S.C. 1324a note) is amended 
by striking the last sentence. 
(b) APPLICATION TO CURRENT EMPLOYEES.— 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS
(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 par-
ticipate in the E-Verify Program.’’. 
(2) BENEFIT
OF
REBUTTABLE
PRESUMP-
TION.—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 pre-
sumption that the person or entity has not violated 
section 274A(a)(2) with respect to such individ-
uals.’’. 
(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)— 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS
ing ‘‘after the date of the hiring, or re-
cruitment or referral, in the case of inquir-
ies made pursuant to a hiring, recruitment 
or referral (and not of previously hired in-
dividuals).’’; and 
(ii) in subparagraph (B), by striking 
‘‘such 3 working days’’ and inserting ‘‘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 CONDI-
TIONAL
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.’’. 
Æ 
VerDate Mar 15 2010 
20:28 Dec 23, 2011
Jkt 019200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6301
E:\BILLS\H3720.IH
H3720
jlentini on DSK4TPTVN1PROD with BILLS