IRLI MODEL TAXPAYER AND CITIZEN PROTECTION ACT
Part B
Taxpayer Protection Provisions
Section 201. Verification of work authorization status by public employers.
Requires public employers and contractors to verify employment status of new employees using the online E-Verify system.
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Section 202. SAVE verification of public benefit eligibility6
Requires state and local agencies to verify lawful status of applicants as condition of eligibility for federal, state and local public benefits; designates the SAVE program as the standard means of verification; restricts eligibility of illegal aliens for public benefits unless authorized by federal law; provides criminal penalties for false statements or fraud by applicants.
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Section 203. Unverified independent contractors; mandatory withholding.
Requires businesses employing an independent contractor for whom income must be reported on IRS Form 1099 ($600+ per annum) to withhold tax from such income at highest marginal rate unless work authorization of the contractor is verified.
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Section 204. Post-secondary educational benefits, lawful presence requirement.
Restricts eligibility for all postsecondary educational benefits, including scholarships, financial aid, enrollment in public institution degree programs, and resident tuition to persons lawfully present in U.S.; grandfather clause protects currently enrolled illegal aliens.
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Section 205 [narrow version]. Business expense deduction for compensation; limited to authorized workers.
Makes compensation over $600 per year paid to unauthorized alien workers non-deductible for state tax purposes; creates safe harbor for employers.
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Section 205 [broad version]. Business expense deduction for compensation; limited to authorized workers.
Prohibits an illegal alien from taking an individual or standard state income tax deduction. Provides exceptions for aliens who adjust status to a lawfully present or work-authorized immigration classification during the tax year. Also prohibits any taxpayer from deducting as a business expense wages or compensation paid to an unauthorized alien worker, unless the taxpayer — employer either verified the worker's employment authorization using the E-Verify system, or verified the worker's social security number and retained a tax file copy of the worker's REAL ID compliant drivers license or non-driver identification card.
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Section 206. Use of ITIN by illegal aliens restricted.
Working concept only: Acceptance of individual taxpayer identity number (ITIN) for purposes not authorized by the U.S. Treasury Department or IRS shall be a state misdemeanor.
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