Sponsors (16)
Last progress June 4, 2025 (8 months ago)
Introduced on June 4, 2025 by Brandon Gill
Referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary, and Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Bars employers (and others) from claiming federal tax deductions for wages paid to or on behalf of unauthorized aliens, defines key terms and creates an E‑Verify-based safe harbor for employers who properly use that system. It also expands and clarifies E‑Verify rules — who may enroll and when checks can be run, creates a rebuttable presumption of compliance for employers who use E‑Verify correctly, and permits job offers to be made conditional on final E‑Verify confirmation. The bill adds limited authority for the Treasury to share taxpayer identity information with SSA and DHS and requires interagency information sharing and adjusted audit procedures to support enforcement.
No deduction is allowed under subsection (a) of section 162 for any wage paid to or on behalf of an unauthorized alien (as defined in INA section 274A(h)(3)).
The term “wages” means all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash.
Safe harbor: If a person or entity participates in the E–Verify Program described in section 403(a) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 and obtains confirmation of identity and employment eligibility in compliance with the program’s terms for the hiring (or recruitment or referral) of an employee, then the prohibition in subparagraph (A) does not apply to wages paid to that employee.
Burden of proof: In any examination of a return regarding a deduction under this paragraph, the Secretary (of the Treasury) must bear the burden of proving that wages were paid to or on behalf of an unauthorized alien.
Limitation on taxpayer audit: The Secretary may not commence an audit or other investigation of a taxpayer solely on the basis of a deduction taken under this section by reason of this paragraph.
Who is affected and how:
Employers: Most directly affected. Employers lose the ability to deduct wages paid to workers who are later found to be unauthorized, which increases the after-tax cost of employing such individuals. Employers face stronger incentives to enroll in and properly use E‑Verify, maintain documentation, and may need to change hiring practices (e.g., making offers conditional on final E‑Verify confirmation). Small businesses and firms without existing E‑Verify processes will bear startup and ongoing compliance costs and potential operational disruption.
Noncitizens and unauthorized workers: The changes increase employer incentives to verify work authorization before or shortly after hire. This may reduce hiring opportunities for unauthorized workers, increase conditional job offers, and create delays in onboarding. Authorized noncitizen workers could face mistaken rejections or verification delays, especially where E‑Verify matches are contested.
Employees and prospective hires more broadly: Workers may experience delays, conditional offers, or additional document scrutiny. Mistakes or mismatches in verification systems could produce adverse employment outcomes and lead to dispute processes.
Payroll processors, HR departments, and tax preparers: Will need to update practices to track E‑Verify use, handle documentation, and account for potential disallowed wage deductions. They may also face increased inquiries and audits by the IRS.
Federal agencies (Treasury/IRS, SSA, DHS): Will gain new responsibilities and limited new authorities for information sharing and enforcement. Treasury/IRS will adjust audit and assessment procedures; SSA and DHS will receive taxpayer identity information in limited cases to assist enforcement. This increases interagency coordination and administrative workloads.
Privacy and legal oversight stakeholders: Expanded data sharing between tax and immigration agencies raises privacy, data-protection, and civil liberties concerns; it may prompt legal challenges or demands for procedural safeguards.
Overall effect: The bill increases immigration-related employment verification through tax disincentives and E‑Verify expansion. It reduces employer risk for compliant use of E‑Verify while raising compliance costs and administrative burden for businesses and federal agencies, and it may reduce hiring opportunities for unauthorized workers but also risk harms from verification errors for lawful workers.