September 10, 2006


Reaching for Legitimacy in the Immigrant Economy: Networks Help Illegal Workers Find Jobs, Housing (S. Mitra Kalita, 9/10/06, Washington Post)

Moments before stepping out of a shadowy illegal economy into the light of a more lawful existence, Edy Diaz practiced what he would say.

" Cambiar is 'to change,' right?" he asked, pausing outside his white delivery van. Then he walked into a Wachovia bank and showed his new Social Security card to the branch manager. Slowly and carefully, he explained: "The number you have is wrong."

For more than a decade, Diaz, who was born in Guatemala, had been using a bogus Social Security number, nine digits purchased on a corner in Columbia Heights. He had carried a hand-me-down cellphone, still in the original owner's name. He had "bought" a home in Beltsville by having a cousin put his name on the loan.

Now, on that sunny morning in July, he looked forward to making new financial footprints -- finally, his own.

An estimated 12 million undocumented immigrants live in the United States, creating what is described as an underground or illicit economy. Their finances elude easy classification. They deal with street criminals and with mortgage lenders. They pay taxes. Their vast yet intimate networks help them find jobs, housing, schools and shopper's discount cards.

Each has his own story, or her own system. As a national debate wages over the future of people like Edy Diaz, he and his family illustrate a strategy they have used to survive in the United States, one that allowed him to live in suburban Washington and work illegally for a decade. [...]

From the time he began working, Edy Diaz understood he should file tax returns. It would help him achieve legal status if he wanted to remain in this country. Most of the 1 million immigrants in the Washington region, regardless of legal status, pay taxes, according to a study conducted by the Urban Institute -- with undocumented immigrants paying about half what the legal immigrants do.

At first, Diaz didn't file. Every week, his employer deducted an appropriate percentage of his wages for federal taxes, Social Security and workers' compensation -- thousands of dollars, as years went by. But because he was using a fake Social Security number, Diaz didn't expect he'd ever get a dime back in benefits.

In 1999, around the time he met Rosa, he decided to start filing, motivated mostly by his hopes of becoming a legal resident. He approached a notario -- someone who provides such services as legal advice, translation and typing services, largely to Spanish speakers. Diaz's notario was a Dominican with a useful background: He had once worked at the Internal Revenue Service.

With his guidance, Diaz did what millions of undocumented immigrants had done before him: He applied to the IRS for an individual taxpayer identification number, or ITIN, which the agency issues to foreign nationals and others ineligible for Social Security numbers. The agency does not verify an applicant's identity and says the document is only for tax-filing purposes. Critics, such as the Center for Immigration Studies, which advocates tighter borders, call the ITIN a "backdoor way" for millions of illegal aliens to receive U.S. government-issued identity numbers.

The IRS counters that the ITIN merely enables the government to collect money from workers who have "responsibilities under the Internal Revenue Code." Internal Revenue Commissioner Mark W. Everson testified to Congress in July: "Our function is tax administration. . . . If someone is working without authorization in this country, he/she is not absolved of tax liability."

Since 1998, Diaz says, he has filled out a 1040 form under his ITIN number every year, even though the W-2 attached to it bears his fake Social Security number. An accountant does the filing for him, and Diaz said nobody has ever asked any questions. In fact, every year he counts on a refund of at least a few thousand dollars.

Diaz said he has also used the ITIN to open bank accounts. For employer-sponsored health insurance, he used the fake Social Security number -- again with no problem. A spokesman for the Social Security Administration said that letters are sent to holders of Social Security numbers suspected of being misused, but if the letters are ignored, the agency has no enforcement power.

For years, Diaz had no idea who was behind the Social Security number, whether it was even a real person's or some arbitrary sequence of digits. It was only in 2000, when he applied for a loan to buy an Acura Integra, that the dealer ran a credit check and told him that the person whose number Diaz had given him was dead.

"But still, I can do something," the dealer said, and went on to process the loan. Diaz asked no questions. He just bought the car.

The reality of illegal immigration is that natives are often in a position to help coworkers, customers, friends, neighbors, whatever, circumvent the law and rather few Americans are disinclined to do so--which is what makes them American.

Posted by Orrin Judd at September 10, 2006 8:59 AM

The solution to the immigration problem is not to stress over sealing the border, it's to make life untenable to those who are here trying to weasle around the laws. It shouldn't be as hard as it is to enforce these things, or come up with a way of enforcing them.

Posted by: RC at September 10, 2006 11:16 AM

The problem is the laws, which is why they're unenforced. They're an affront to the conscience and an assault on the economy.

Posted by: oj at September 10, 2006 12:07 PM

He pays taxes during the year. However, because he falls into the low income bracket, he gets all kinds of tax "benefits" and actually gets more money back at the end of the year than he paid during the year.

Therefore, he pays no taxes!!!! He actually makes money from the IRS!!!!

Posted by: Jean at September 11, 2006 2:55 PM


How much does he make a year?

Posted by: oj at September 11, 2006 3:03 PM