SEC. 205. PENALTY FOR FAILURE TO FILE CORRECT INFOR-
MATION RETURNS. 
Section 6721 of the Internal Revenue Code of 1986 
(26 U.S.C. 6721) is amended by adding at the end the 
following: 
‘‘(f) The Secretary shall assess the maximum allow-
able penalties on 100 percent of the employers designated 
in any tax year by the Social Security Administration as 
the most egregious noncompliant employers. 
‘‘(g) Notwithstanding any other provision in this sec-
tion, in the case of a failure described in subsection (a)(2) 
with respect to any person employing an alien not author-
ized to be so employed, the penalty under this section shall 
be determined in accordance with the following table: 
‘‘In the case of— 
Not less than— 
Not more than— 
The first offense .............
$2,500 ...........................
$5,000 
The second offense .........
$7,500 ...........................
$10,000 
The third offense ............
$25,000 .........................
$40,000.’’. 
SEC. 206. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated such sums 
as may be required to carry out this subtitle. 
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Subtitle B—Nondeductibility of 
Wages Paid to Unauthorized Aliens 
SEC. 211. CLARIFICATION THAT WAGES PAID TO UNAU-
THORIZED 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 remunera-
tion 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 Immigra-
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tion Reform and Immigrant Responsibility Act 
of 1996 (8 U.S.C. 1324a note) and obtains con-
firmation of identity and employment eligibility 
in compliance with the terms and conditions of 
the program with respect to the hiring (or re-
cruitment or referral) of an employee, subpara-
graph (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: 
‘‘(11) 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’’; 
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(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 
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: 
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‘‘(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, for pur-
poses of carrying out any enforcement activities 
of such Administration or Department with re-
spect to such employers or individuals.’’. 
(B) Recordkeeping.—Paragraph (4) of sec-
tion 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.— 
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