One of the biggest postelection debates in Washington surrounds President Obama’s legal authority to grant of legal status to undocumented immigrants. The discussion is the latest chapter in a series of events that included the Obama administration issuing in 2012 what has become known as the Deferred Action for Childhood Arrivals (DACA). DACA gave legal status to certain undocumented immigrants who were under thirty-one on June 15, 2012. Although the current debate is about expanding a similar status to others, which President Obama seems set to announce, this post covers the basics of DACA for the purpose of churches and other religious organizations hiring someone with DACA status. Specifically, it addresses which tax and other forms organizations first hiring someone with DACA status to use. In other words, it answers the questions whether someone who falls under DACA qualifies as an Other U.S. person as defined by form W-9 and,
if so, whether that person would need to meet other requirements or fill out
other forms.
if so, whether that person would need to meet other requirements or fill out
other forms.
The answer to the first question is yes: an
individual with DACA status meets the definition of U.S.
person for tax purposes because the person is almost certainly a resident
alien under tax law. This is because DACA status requires criteria that
necessarily would mean the individual would meet the substantial-presence test.
individual with DACA status meets the definition of U.S.
person for tax purposes because the person is almost certainly a resident
alien under tax law. This is because DACA status requires criteria that
necessarily would mean the individual would meet the substantial-presence test.
The answer to the second question is not for the W-9.
All the W-9 requires is the sworn statement that the signatory is a U.S.
person. But there are other items that employers need to take care of,
including Form
I-9 from U.S. Citizenship and Immigration Services.
All the W-9 requires is the sworn statement that the signatory is a U.S.
person. But there are other items that employers need to take care of,
including Form
I-9 from U.S. Citizenship and Immigration Services.
A person with DACA
status is a U.S. person under the tax code.
First, DACA is a memorandum authored by the Obama
administration directing relevant federal officials to practice prosecutorial
discretion toward undocumented immigrants who migrated as children. This does
not confer lawful immigration status, alter immigration status, or provide a
path to citizenship. But it does give authorization to work. Here’s some basic
information: http://www.uscis.gov/humanitarian/consideration-deferred-action-childhood-arrivals-process/frequently-asked-questions.
administration directing relevant federal officials to practice prosecutorial
discretion toward undocumented immigrants who migrated as children. This does
not confer lawful immigration status, alter immigration status, or provide a
path to citizenship. But it does give authorization to work. Here’s some basic
information: http://www.uscis.gov/humanitarian/consideration-deferred-action-childhood-arrivals-process/frequently-asked-questions.
The tax code’s definition of United States person
includes “a citizen or resident of the United States.” 26 U.S.C. § 7701(a)(30).
This is consistent with the definition on W-9 and its accompanying instructions. Resident aliens file a W-9, while nonresident aliens
file a W-8 or Form 8233. So the question is whether a student with DACA status
is a resident alien or a nonresident alien individual for tax
purposes.
includes “a citizen or resident of the United States.” 26 U.S.C. § 7701(a)(30).
This is consistent with the definition on W-9 and its accompanying instructions. Resident aliens file a W-9, while nonresident aliens
file a W-8 or Form 8233. So the question is whether a student with DACA status
is a resident alien or a nonresident alien individual for tax
purposes.
The tax code defines resident
alien as an individual who is “[l]awfully admitted for permanent
residence,” meets the “substantial presence test,” or makes a first-year
election. 26 U.S.C. § 7701(b)(1)(A). An individual meets the
substantial-presence test if the individual “was present in the United States
on at least 31 days during the calendar year” and the individual is present in
the United States for at least 183 days during the current and preceding two
calendar years after a provided calculation. Days present in the current year
each count fully. Days present in the previous year count as 1/3 day each. Days
present in the year before last year count as 1/6 days.
alien as an individual who is “[l]awfully admitted for permanent
residence,” meets the “substantial presence test,” or makes a first-year
election. 26 U.S.C. § 7701(b)(1)(A). An individual meets the
substantial-presence test if the individual “was present in the United States
on at least 31 days during the calendar year” and the individual is present in
the United States for at least 183 days during the current and preceding two
calendar years after a provided calculation. Days present in the current year
each count fully. Days present in the previous year count as 1/3 day each. Days
present in the year before last year count as 1/6 days.
(2014
days in U.S. × 1) + (2013 days in U.S. × 1/3) + (2012 days in
U.S. × 1/6).
days in U.S. × 1) + (2013 days in U.S. × 1/3) + (2012 days in
U.S. × 1/6).
The substantial-presence
test is inapplicable if the individual has a closer connection to a foreign
country. 26 U.S.C. § 7701(b)(3)(B).
test is inapplicable if the individual has a closer connection to a foreign
country. 26 U.S.C. § 7701(b)(3)(B).
Given that the student has
DACA status, I’ll assume the individual has been in the country without
interruption for at least the past three years. Assuming that, today would be
day 169 of being present in 2014. All that would be needed from 2013 or 2012 is
at least forty-two days in the United States: (169 × 1) + (42 × 1/3) = 183.
DACA status, I’ll assume the individual has been in the country without
interruption for at least the past three years. Assuming that, today would be
day 169 of being present in 2014. All that would be needed from 2013 or 2012 is
at least forty-two days in the United States: (169 × 1) + (42 × 1/3) = 183.
In other words, DACA doesn’t affect which tax form to fill out. If the
individual meets the requirements of 26 U.S.C. § 7701(b)(3), the definition of U.S.
person is met.
individual meets the requirements of 26 U.S.C. § 7701(b)(3), the definition of U.S.
person is met.
For more, here is a brief
introduction to residency under tax law, including a discussion of the
differences between tax and immigration law: http://www.irs.gov/Individuals/International-Taxpayers/Introduction-to-Residency-Under-U.S.-Tax-Law.
Here is an explanation of the substantial-presence test: http://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test.
Here are some definitions of basic terms: http://www.irs.gov/Individuals/International-Taxpayers/Immigration-Terms-and-Definitions-Involving-Aliens.
introduction to residency under tax law, including a discussion of the
differences between tax and immigration law: http://www.irs.gov/Individuals/International-Taxpayers/Introduction-to-Residency-Under-U.S.-Tax-Law.
Here is an explanation of the substantial-presence test: http://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test.
Here are some definitions of basic terms: http://www.irs.gov/Individuals/International-Taxpayers/Immigration-Terms-and-Definitions-Involving-Aliens.
Other requirements
for verifying immigration status
There are also nontax requirements, namely that the employer keep a Form I-9 on file. The links I
provided above go into more detail on these issues, but the bottom line is that congregations and other employers should do the basic legwork to verify that employees are legally eligible to work. Here’s another
resource: http://www.uscis.gov/sites/default/files/USCIS/Humanitarian/Deferred%20Action%20for%20Childhood%20Arrivals/DACA-Fact-Sheet-I-9_Guidance-for-employers_nov20_2012.pdf.
provided above go into more detail on these issues, but the bottom line is that congregations and other employers should do the basic legwork to verify that employees are legally eligible to work. Here’s another
resource: http://www.uscis.gov/sites/default/files/USCIS/Humanitarian/Deferred%20Action%20for%20Childhood%20Arrivals/DACA-Fact-Sheet-I-9_Guidance-for-employers_nov20_2012.pdf.
Also, be aware that a person with DACA status
should have an Employment Authorization Document (E.A.D.) with a photograph,
and that is included in List A of the Form I-9, meaning that is all that is
required to support legal employment status. Employers can actually be liable
if they ask for more than the required number of documents supporting
employment eligibility. In fact, employers may be safer not to inquire about
DACA status, for instance by inquiring how someone obtained the E.A.D.
should have an Employment Authorization Document (E.A.D.) with a photograph,
and that is included in List A of the Form I-9, meaning that is all that is
required to support legal employment status. Employers can actually be liable
if they ask for more than the required number of documents supporting
employment eligibility. In fact, employers may be safer not to inquire about
DACA status, for instance by inquiring how someone obtained the E.A.D.
Pay attention to the news going forward
Should the Obama administration expand its conferral of legal status to undocumented immigrants not covered by DACA, that program will likely take a similar shape to the 2012 action. But pay attention to the news. When presented with a question, refer to the I.R.S., the U.S. Citizenship and Immigration Services, and an attorney before taking on a new hire.
Have a question about legal issues affecting religious organizations? Let me know at questions@lawmeetsgospel.com or @LawMeetsGospel.