USCIS also obtains information from third parties, not  including IRS, to verify applicants’ self-reported data. As of December 2003, business sponsors from our  nationwide selection who were not in installment agreements with the IRS  or otherwise making payments to IRS, for taxes due, had unpaid  assessments totaling $3.7 billion. If businesses  were required to meet their tax obligations, to the extent that future  business sponsors owe taxes, they would need to pay their tax bill or make  payment arrangements with the IRS to come into compliance before  becoming eligible to sponsor immigrant workers to enter the country. USCIS officials said a statutory change would be preferable to a regulatory  change because, although they acknowledge no explicit prohibition exists  in immigration laws against conditioning approval of employer petitions on  their tax compliance, they have serious legal concerns about USCIS’s  authority to issue such a regulation absent specific statutory authority. USCIS Can Benefit from Data Sharing with IRS in Making Immigration Eligibility Decisions

			More Accurate Immigration Eligibility Decisions

IRS data can enable USCIS adjudicators to make more accurate eligibility  decisions by better identifying businesses that may not have met  immigration eligibility criteria. Sixteen percent of businesses from our  nationwide selection (67,949 of 413,723 businesses) applying to sponsor  immigrant workers did not file one or more tax returns at the time of their  application to sponsor an immigrant worker between 1997 and 2004 (app. IRS and USCIS Have Data-Sharing Options but Each Presents Challenges

A variety of options is available to IRS and USCIS for establishing and  implementing data sharing. An applicant-initiated data-sharing relationship  could be implemented under existing IRC authority through a taxpayer  consent, whereby a taxpayer authorizes IRS to disclose his or her  information to other agencies. However, achieving such efficient data sharing may take time due  to various legal, technological, and cost challenges that must be overcome. States are the  biggest users of taxpayer information. This data-sharing relationship’s annual savings  are estimated at $463 million. Further, because  collecting the unpaid assessments of business sponsors would displace  other tax collections work, absent funding to cover its costs of bringing the  business sponsors into compliance, IRS might not realize a net increase in  overall tax collections. Short of this  change, either an applicant-initiated or an agency-initiated data-sharing  arrangement could help improve benefit decisions. In order to develop a better  understanding of the implementation challenges and costs, to explore the  most practical options for full scale implementation of data sharing, and to  more completely assess benefits to IRS and USCIS from data sharing,  USCIS should undertake a pilot test of data sharing under existing  authority to use taxpayer consents to obtain tax data. Matters for Congressional Consideration

To improve taxpayer compliance and USCIS’s immigration benefit  decisions, Congress should consider (1) changing immigration eligibility to  require businesses applying to sponsor immigrant workers to meet tax  filing and payment obligations to sponsor immigrant workers and  (2) authorizing a user fee to be collected and retained by IRS to cover the  costs of bringing non-compliant taxpayers into compliance. Objective, Scope, and Methodology

Our objectives were to determine the (1) potential benefits of data  matching and the (2) options for establishing and maintaining a data- sharing relationship between the Internal Revenue Service (IRS) and the  U.S. Citizenship and Immigration Services (USCIS), including any  challenges associated with those options.
Why GAO Did This Study

In 2000, federal agencies estimated they saved at least $900 million annually through data sharing initiatives. The Internal Revenue Service (IRS) can use data from taxpayers and third parties to better ensure taxpayers meet their obligations. Likewise, Congress has authorized certain agencies access to taxpayer information collected by IRS to better determine benefit eligibility. In July 2004, we reported that data sharing between IRS and the United States Citizenship and Immigration Services (USCIS) has the potential to improve tax compliance as well as immigration eligibility decisions (GAO-04-972T). For this report, GAO determined (1) the potential benefits of data matching, and (2) the options and associated challenges.

What GAO Found

Data sharing can help improve (1) tax compliance if businesses applying to sponsor immigrant workers are required to meet tax filing and payment requirements, and (2) the accuracy and timeliness of USCIS's immigration eligibility decisions if it obtained tax data from IRS to help ensure business sponsors meet eligibility criteria. As of December 2003, IRS databases showed 18,942 businesses (5 percent) applying to sponsor immigrant workers had $5.6 billion in unpaid assessments. Of this amount, businesses were not in installment agreements with IRS or otherwise making payments on $3.7 billion. If future business sponsors owe taxes and are required to meet their tax obligations, they would need to make arrangements with the IRS to come into compliance. Although USCIS officials acknowledge that no explicit prohibition exists in immigration laws against conditioning approval of employer applications on their tax compliance, USCIS officials said a statutory change is preferable because they have legal concerns about USCIS's authority to issue such a regulation absent specific authority. IRS data can help USCIS make more accurate eligibility decisions by better identifying businesses that may not have met eligibility criteria due to having unpaid assessments or not filing returns. In our nationwide selection, 67,949 of 413,723 (16 percent) business sponsors were in IRS's nonfiler database at the time of their application. A variety of options is available to IRS and USCIS for establishing and implementing data sharing. An applicant-initiated data-sharing arrangement could be implemented under existing Internal Revenue Code authority through taxpayer consent, whereby taxpayers authorize IRS to disclose their information. USCIS then could verify applicant-provided data by obtaining tax returns or tax transcripts. Treasury guidance suggests a small-scale pilot using consents as a way to make the business case for continued access to taxpayer information. In general, the more that data sharing could be done electronically, the more efficient the data sharing could be. However, achieving electronic data sharing may take longer than paper-based processes due to legal, technological, and cost challenges. Further, if business sponsors need to come into compliance, net tax collections might not increase if collecting their taxes displaces other IRS work. Establishing user fees to cover data-sharing costs could be a way to fund data sharing, but IRS lacks the authority to collect and retain a user fee to cover compliance-related costs associated with data sharing.