Citizenship Hurdles Pile Up As DHS Puts Taxes Under Microscope

(MENAFN- Live Mint) (Bloomberg Law) -- The Department of Homeland Security is more heavily scrutinizing immigrants' tax records, issuing denials of citizenship for those on IRS payment plans or who have sought filing extensions.

It's a stark departure from past practices for evaluating whether would-be citizens meet the agency's“good moral character” standard, where an applicant's willingness to pay taxes, including through payment plans, was previously considered positive evidence in an applicant's case for naturalization, attorneys said.

But the policy shift at US Citizenship and Immigration Services makes those circumstances a new hurdle for would-be citizens amid plummeting naturalization rates in President Trump's second term.

Tax payments came under sharper review after a policy memorandum issued last year directed officers to take a“holistic” approach to evaluating good moral character, including evidence of community involvement, educational background, and compliance with tax obligations. Prior to the memo, unless there was a tax-related charge or conviction, they weren't used against applicants, attorneys said.

Bloomberg Law reviewed multiple naturalization denials shared by attorneys based solely on participation in a payment plan or request of a filing extension.

Citing agreements with the IRS to file taxes later or pay in installments in citizenship denials goes well beyond the intent of federal immigration statute and the language of USCIS regulations, said Doug Rand, a former senior official at the agency.

“It's completely looney tunes,” he said, predicting attorneys would successfully appeal the denials.“It's a waste of time, especially when the agency has all these big backlogs. But the political leadership doesn't care.”

The administration, meanwhile, defended its ability to review all factors.

“Ensuring tax compliance is a long-standing legal requirement this administration will not overlook,” said Zach Kahler, a spokesman USCIS.

The IRS didn't respond to a request for comment.

More Time to File

It's a common misconception that a filing extension defers the deadline to pay, but taxpayers must still make an estimated payment of what they owe. Not doing so results in a civil penalty.

Those who requested a filing extension but didn't pay by the deadline are having their naturalization applications denied, as are those paying taxes on installments.

For example, Lily Axelrod, an immigration attorney in Memphis, said one such client was denied for naturalization last month shortly after her husband took the citizenship oath.

“She's not had a single immigration violation,” Axelrod said.

USCIS' rejection stated her request for a filing extension and failure to pay on time without extenuating circumstances was“an unlawful act that adversely affects your moral character.” That language is typical in recent denials, even for applicants with no criminal records or history of sanctions by the IRS.

“USCIS is being more harsh than the IRS itself,” said Michelle Marty Rivera, an immigration and tax lawyer based in Miami.

Moral Character Test

Demonstrating good moral character has been a requirement for citizenship since the passage of the first naturalization law in the 18th century.

Evaluations focused on criminal histories, although the USCIS policy manual states that an immigrant who fails to file or fully pay their taxes may be precluded from meeting the criteria.

Examples cited in the manual, however, involve denials of immigration benefits because of convictions for tax evasion and conspiracy to defraud the government.

“Previously the immigration system tried to reward people for participating in the tax system,” said Sarah Krieger, senior policy counsel at the National Immigration Law Center.

Finding applicants lack good moral character based on that one factor alone“would violate not just the statute and regulation, but their own recent policy,” she added.

Denial Details

The rejections by USCIS describe failure to fully pay tax obligations as an“unlawful act.” Several noted that the applicant hadn't demonstrated extenuating circumstances for failing to pay all taxes on time.

Eric Welsh, a partner of Reeves Immigration Law Group, said each of the 12 attorneys at his firm has received a similar decision involving extensions and payment plans.

“Those do not per se indicate that a person lacks good moral character,” Welsh said.“That's the problem with the good moral character standard, they're so fuzzy.”

Kathleen Campbell Walker, immigration practice group chair at Dickinson Wright PLLC, said one client married to a US citizen was denied a naturalization request because of her spouse's payment plans with the IRS - even though the policy memo states that such agreements shouldn't be considered an adverse factor.

“There's no doubt we have a different approach now to utilizing what's lawful under the internal revenue code,” she said.

Scrutinizing Naturalization

Lora Ries, director of the Border Security and Immigration Center at the conservative Heritage Foundation, said good moral character was a“low hurdle to clear,” where officers looked for negative marks as opposed to the burden of proof being on the immigrant.

“This administration is saying, no, that's the wrong approach,” Ries said.“You need to show evidence of good moral character. It's not just, we don't find anything negative.”

But USCIS officers don't have the training or background in tax law to make those determinations, said Shev Dalal-Dheini, senior director of government relations at the American Immigration Lawyers Association. The tax scrutiny is another way for USCIS to stifle naturalizations, she said. Sal Macias, an attorney in Phoenix, said immigrants are doing everything they can to meet a standard that's constantly in flux.

He said one client, a green card holder of nearly 40 years, was approved for a naturalization oath ceremony. But documents reviewed by Bloomberg Law show the client was denied for being on a payment plan. The client has chosen to wait a few more years before trying again.

“I was actually happy that he decided to seek counsel instead of just doing it on his own,” Macias said.“It makes me feel inept at times to give advice that continues to shift on almost a weekly basis, especially when it comes to immigration proceedings that can take months, if not years, to have an outcome.”

- With assistance from Erin Slowey.

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