New IDEA Act

I 116TH CONGRESS 1ST SESSION H. R. 904 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 JANUARY 30, 2019 Mr. KING of Iowa (for himself, Mr. DUNCAN, Mr. GAETZ, and Mr. DESJARLAIS) 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 Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provi- sions 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- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as— 4 (1) the ‘‘New IDEA Act’’; or 5 (2) the ‘‘New Illegal Deduction Elimination 6 Act’’. 7 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 2 •HR 904 IH SEC. 2. CLARIFICATION THAT WAGES PAID TO UNAUTHOR- 1 IZED ALIENS MAY NOT BE DEDUCTED FROM 2 GROSS INCOME. 3 (a) IN GENERAL.—Subsection (c) of section 162 of 4 the Internal Revenue Code of 1986 (relating to illegal 5 bribes, kickbacks, and other payments) is amended by 6 adding at the end the following new paragraph: 7 ‘‘(4) WAGES PAID TO OR ON BEHALF OF UNAU- 8 THORIZED ALIENS.— 9 ‘‘(A) IN GENERAL.—No deduction shall be 10 allowed under subsection (a) for any wage paid 11 to or on behalf of an unauthorized alien, as de- 12 fined under section 274A(h)(3) of the Immigra- 13 tion and Nationality Act (8 U.S.C. 14 1324a(h)(3)). 15 ‘‘(B) WAGES.—For the purposes of this 16 paragraph, the term ‘wages’ means all remu- 17 neration for employment, including the cash 18 value of all remuneration (including benefits) 19 paid in any medium other than cash. 20 ‘‘(C) SAFE HARBOR.—If a person or other 21 entity is participating in the E–Verify Program 22 described in section 403(a) of the Illegal Immi- 23 gration Reform and Immigrant Responsibility 24 Act of 1996 (8 U.S.C. 1324a note) and obtains 25 confirmation of identity and employment eligi- 26 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 3 •HR 904 IH bility in compliance with the terms and condi- 1 tions of the program with respect to the hiring 2 (or recruitment or referral) of an employee, 3 subparagraph (A) shall not apply with respect 4 to wages paid to such employee. 5 ‘‘(D) BURDEN OF PROOF.—In the case of 6 any examination of a return in connection with 7 a deduction under this section by reason of this 8 paragraph, the Secretary shall bear the burden 9 of proving that wages were paid to or on behalf 10 of an unauthorized alien. 11 ‘‘(E) LIMITATION ON TAXPAYER AUDIT.— 12 The Secretary may not commence an audit or 13 other investigation of a taxpayer solely on the 14 basis of a deduction taken under this section by 15 reason of this paragraph.’’. 16 (b) SIX-YEAR LIMITATION ON ASSESSMENT AND 17 COLLECTION.—Subsection (c) of section 6501 of the In- 18 ternal Revenue Code of 1986 (relating to exceptions) is 19 amended by adding at the end the following new para- 20 graph: 21 ‘‘(12) DEDUCTION CLAIMED FOR WAGES PAID 22 TO UNAUTHORIZED ALIENS.—In the case of a return 23 of tax on which a deduction is shown in violation of 24 section 162(c)(4), any tax under chapter 1 may be 25 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 4 •HR 904 IH assessed, or a proceeding in court for the collection 1 of such tax may be begun without assessment, at 2 any time within 6 years after the return was filed.’’. 3 (c) USE OF DOCUMENTATION FOR ENFORCEMENT 4 PURPOSES.—Section 274A of the Immigration and Na- 5 tionality Act (8 U.S.C. 1324a) is amended— 6 (1) in subparagraph (b)(5), by inserting ‘‘, sec- 7 tion 162(c)(4) of the Internal Revenue Code of 8 1986,’’ after ‘‘enforcement of this Act’’; 9 (2) in subparagraph (d)(2)(F), by inserting ‘‘, 10 section 162(c)(4) of the Internal Revenue Code of 11 1986,’’ after ‘‘enforcement of this Act’’; and 12 (3) in subparagraph (d)(2)(G), by inserting 13 ‘‘section 162(c)(4) of the Internal Revenue Code of 14 1986 or’’ after ‘‘or enforcement of’’. 15 (d) AVAILABILITY OF INFORMATION.— 16 (1) IN GENERAL.—The Commissioner of Social 17 Security, the Secretary of the Department of Home- 18 land Security, and the Secretary of the Treasury, 19 shall jointly establish a program to share informa- 20 tion among such agencies that may or could lead to 21 the identification of unauthorized aliens (as defined 22 under section 274A(h)(3) of the Immigration and 23 Nationality Act), including any no-match letter, any 24 information in the earnings suspense file, and any 25 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 5 •HR 904 IH information in the investigation and enforcement of 1 section 162(c)(4) of the Internal Revenue Code of 2 1986. 3 (2) DISCLOSURE BY SECRETARY OF THE 4 TREASURY.— 5 (A) IN GENERAL.—Subsection (i) of sec- 6 tion 6103 of the Internal Revenue Code of 1986 7 is amended by adding at the end the following 8 new paragraph: 9 ‘‘(9) PAYMENT OF WAGES TO UNAUTHORIZED 10 ALIENS.—Upon request from the Commissioner of 11 the Social Security Administration or the Secretary 12 of the Department of Homeland Security, the Sec- 13 retary shall disclose to officers and employees of 14 such Administration or Department— 15 ‘‘(A) taxpayer identity information of em- 16 ployers who paid wages with respect to which a 17 deduction was not allowed by reason of section 18 162(c)(4), and 19 ‘‘(B) taxpayer identity information of indi- 20 viduals to whom such wages were paid, 21 for purposes of carrying out any enforcement activi- 22 ties of such Administration or Department with re- 23 spect to such employers or individuals.’’. 24 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 6 •HR 904 IH (B) RECORDKEEPING.—Paragraph (4) of 1 section 6103(p) of such Code is amended— 2 (i) by striking ‘‘(5), or (7)’’ in the 3 matter preceding subparagraph (A) and in- 4 serting ‘‘(5), (7), or (9)’’, and 5 (ii) by striking ‘‘(5) or (7)’’ in sub- 6 paragraph (F)(ii) and inserting ‘‘(5), (7), 7 or (9)’’. 8 (e) EFFECTIVE DATE.— 9 (1) Except as provided in paragraph (2), this 10 Act and the amendments made by this Act shall 11 take effect on the date of the enactment of this Act. 12 (2) The amendments made by subsections (a) 13 and (b) shall apply to taxable years beginning after 14 December 31, 2018. 15 SEC. 3. MODIFICATION OF E–VERIFY PROGRAM. 16 (a) MAKING PERMANENT.—Subsection (b) of section 17 401 of the Illegal Immigration Reform and Immigrant Re- 18 sponsibility Act of 1996 (8 U.S.C. 1324a note) is amended 19 by striking the last sentence. 20 (b) APPLICATION TO CURRENT EMPLOYEES.— 21 (1) VOLUNTARY ELECTION.—The first sentence 22 of section 402(a) of such Act is amended to read as 23 follows: ‘‘Any person or other entity that conducts 24 any hiring (or recruitment or referral) in a State or 25 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 7 •HR 904 IH employs any individuals in a State may elect to par- 1 ticipate in the E–Verify Program.’’. 2 (2) BENEFIT OF REBUTTABLE PRESUMP- 3 TION.—Paragraph (1) of section 402(b) of such Act 4 is amended by adding at the end the following: ‘‘If 5 a person or other entity is participating in the E– 6 Verify Program and obtains confirmation of identity 7 and employment eligibility in compliance with the 8 terms and conditions of the program with respect to 9 individuals employed by the person or entity, the 10 person or entity has established a rebuttable pre- 11 sumption that the person or entity has not violated 12 section 274A(a)(2) with respect to such individ- 13 uals.’’. 14 (3) SCOPE OF ELECTION.—Subparagraph (A) 15 of section 402(c)(2) of such Act is amended to read 16 as follows: 17 ‘‘(A) IN GENERAL.—Any electing person or 18 other entity may provide that the election under 19 subsection (a) shall apply (during the period in 20 which the election is in effect)— 21 ‘‘(i) to all its hiring (and all recruit- 22 ment or referral); 23 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 8 •HR 904 IH ‘‘(ii) to all its hiring (and all recruit- 1 ment or referral and all individuals em- 2 ployed by the person or entity); 3 ‘‘(iii) to all its hiring (and all recruit- 4 ment or referral) in one or more States or 5 one or more places of hiring (or recruit- 6 ment or referral, as the case may be); or 7 ‘‘(iv) to all its hiring (and all recruit- 8 ment or referral and all individuals em- 9 ployed by the person or entity) in one or 10 more States or one or more place of hiring 11 (or recruitment or referral or employment, 12 as the case may be).’’. 13 (4) PROCEDURES FOR PARTICIPANTS IN E– 14 VERIFY PROGRAM.—Subsection (a) of section 403 of 15 such Act is amended— 16 (A) in the matter preceding paragraph (1), 17 by inserting ‘‘or continued employment in the 18 United States’’ after ‘‘United States’’; and 19 (B) in paragraph (3)— 20 (i) in subparagraph (A), by striking 21 all that follows ‘‘(as specified by the Sec- 22 retary of Homeland Security)’’ and insert- 23 ing ‘‘after the date of the hiring, or re- 24 cruitment or referral, in the case of inquir- 25 VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS 9 •HR 904 IH ies made pursuant to a hiring, recruitment 1 or referral (and not of previously hired in- 2 dividuals).’’; and 3 (ii) in subparagraph (B), by striking 4 ‘‘such 3 working days’’ and inserting ‘‘the 5 specified period’’. 6 (c) APPLICATION TO JOB APPLICANTS.—Section 7 402(c)(2) of such Act is amended by adding at the end 8 the following: 9 ‘‘(C) JOB OFFER MAY BE MADE CONDI- 10 TIONAL ON FINAL CONFIRMATION BY E– 11 VERIFY.—A person or other entity that elects to 12 participate in the E–Verify Program may offer 13 a prospective employee an employment position 14 conditioned on final verification of the identity 15 and employment eligibility of the employee 16 using the employment eligibility confirmation 17 system established under section 404.’’. 18 Æ VerDate Sep 11 2014 04:30 Feb 09, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\H904.IH H904 kjohnson on DSK79L0C42 with BILLS