[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1849 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1849

 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 SENATE OF THE UNITED STATES

                             July 23, 2007

   Mr. Smith introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Lawful Worker Tax Deduction Act''.

SEC. 2. CLARIFICATION THAT WAGES PAID TO UNAUTHORIZED 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 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) 6-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 Illegal Immigration Reform and Immigrant Responsibility Act of 1996 
is amended--
            (1) in subparagraph (b)(5), by inserting ``, section 
        162(c)(4) of the Internal Revenue Code of 1986,'' after 
        ``enforcement of this chapter'';
            (2) in subparagraph (d)(2)(F), by inserting ``, section 
        162(c)(4) of the Internal Revenue Code of 1986,'' after 
        ``enforcement of this chapter''; 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.--The Commissioner of Social 
Security shall make available to the Commissioner of Internal Revenue 
any information related to the investigation and enforcement of section 
162(c)(4) of the Internal Revenue Code of 1986, including any no-match 
letter and any information in the suspense earnings file.
    (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, 2007.
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