A GAO Study on the benefits of data sharing between the IRS and U.S. Customs and Immigration Service showed that options exist for implementing such a system, but that there are several problems that still need to be addressed. GAO conducted the study in response to an estimate in 2000 that federal agencies made stating that they had saved at least $900 million annually through data sharing programs. The study determined the potential benefits of a data sharing program and the options and challenges of implementing such a system.

The study found that tax compliance would improve if businesses applying to sponsor immigrant workers are required to meet tax filing and payment requirements. Furthermore, such changes might, according to the study, improve the accuracy and timeliness of USCIS’s immigration eligibility. IRS data can help USCIS make more accurate eligibility decisions by helping to identify unqualified businesses that have not paid assessments or not filed returns.In December of 2003, IRS databases showed that approximately 19,000 businesses applying to sponsor immigrant workers had $5.6 billion in unpaid assessments. Requirements to meet tax obligations placed on future businesses would require these businesses to arrange a means of compliance with the IRS. No explicit prohibition exists in immigration law against conditioning approval of employer applications on their tax compliance at the present time, but USCIS officials would like to see a change to this situation because there are legal concerns about the agency’s authority to issue such a rule without the specific authority to do so.  GAO took a random selection that showed approximately 68,000 of 413,723 (16 percent) business sponsors were in the IRS nonfiler database when they applied.

Under an applicant-initiated data-sharing arrangement implemented under the existing Internal Revenue Code authority through taxpayer consent to release information, the USCIS could verify applicant-provided data by obtaining tax returns and transcripts. Generally, data-sharing is more efficient when done entirely electronically, but officials fear the long-term costs, as well as legal and technological difficulties, of implementing such a system.

The GAO’s suggestions include requiring businesses applying to sponsor immigrant employees to meet tax filing and payment obligations and authorizing a user fee to be maintained by the IRS to cover compliance-related costs. In addition, the GAO recommended that USCIS consult with the IRS in conducting a pilot data-sharing text by using taxpayer consents. Both agencies have agreed with the pilot study, although USCIS raised several issues concerning such a study.