Today, The New York Times has an article about the rise in undocumented immigrants in the USA who are filing taxes. Since 1996 undocumented immigrants can legally file taxes with an Individual Taxpayer Identification Number (ITIN). ITINs were created to allow both undocumented immigrants as well as foreign investors file returns, although it’s generally assumed that most of the 11 million numbers issues since then have been used by undocumented immigrants.

The IRS wants to encourage people to file taxes, and for the most part view their job as that of collecting taxes, not managing immigrations issues, although since 9/11 there have been a few exceptions, specially in relation to the Department of Homeland Security.

Some critics of ITINs and issues that generally relate to undocumented immigrants argue that, undocumented immigrants are only filing taxes because they expect a refund, but actually about two-thirds of those filing taxes with an ITIN will actually own the IRS money. On average these undocumented immigrants filing taxes earn less than $10,000 a year and will owe about $600 worth of taxes.

This trend has also been noticed by taxes businesses which do not want to pass of the opportunities available with this new market. Companies like Liberty Tax Services and H&R Block are learning to navigate the complications with this portion of tax filers, and are reaping the economic benefit.

The article suggests that the other main reason undocumented immigrants are filing taxes is because this will create a paper trail of their residency in the USA, and that this will eventually help them establish legal residency here. While this might be partially true, consider that many of these immigrants are paying taxes for public services which they are not likely to benefit from. They are also contributing to our Medicare and Social Security funds, and this they are almost guaranteed not to ever see. A New York Times article from 2005 places the subsidy by undocumented immigrants to Social Security at about 7 billion a year!