Immigration Law Advisory - Recent Developments In Immigration Compliance And Enforcement – Impact On Businesses And Individuals

IRS Representative Announces Examinations of U.S. Withholding Agents’ Payments of Certain Types of U.S.-Sourced Income to Nonresident Aliens are Forthcoming

At a recent industry workshop on communications, technology and media in Los Angeles sponsored by the Internal Revenue Service (IRS) and the Tax Executives Institute, Randy Perrin, an IRS media/entertainment technical advisor announced that Auditors in the IRS’ Large and Mid-size Business (LMSB) Division will soon commence examinations of U.S. withholding agents for the purpose of reviewing certain payments of U.S.-sourced income to nonresident aliens under tax code Section 1441.  The examinations will look at payments to both individuals and foreign businesses.

Perrin indicated that the focus of the effort is “the quality of the overall reporting and withholding systems and procedures of the withholding agents to ensure proper classification of payments, sourcing, and the validity of documentation of foreign persons.”

Perrin also indicated that the examination efforts will be divided into subgroups, with one subgroup aimed at aliens working in the United States.  Within this group, there will be separate projects on employers who sponsor H-1B visas and on foreign national entertainers performing in the United States.  Perrin stated that, following information and leads from H-1B visa issuances, IRS auditors will focus on how employers account for the aliens working for them.  Perrin also stated that IRS auditors completed training for the H-1B visa project in April 2009 and training for the foreign national entertainers’ project is set to begin during the summer of 2009.

Our office will continue to monitor developments on this topic and provide updated information as it becomes available.

ICE Announces New Work Site Enforcement Strategy Aimed at Employers Who Knowingly Hire Illegal Workers

The Department of Homeland Security (DHS) and Immigration and Customs Enforcement (ICE) recently announced a new work site enforcement strategy focusing the agency’s resources in the work site enforcement program on the criminal prosecution of employers who knowingly hire illegal workers.  This shift reflects a renewed focus on employers who cultivate illegal workplaces by breaking immigration laws and knowingly hiring illegal workers.  A summary of the new ICE work site enforcement strategy is available online by clicking here.

ICE will continue to arrest and initiate removal proceedings for illegal workers found in the course of work site enforcement actions in a manner consistent with immigration law and DHS priorities.  The agency will use all available civil and administrative tools, including civil fines and debarment, to penalize and deter illegal employment.  Additionally, ICE will obtain indictments, criminal arrest or search warrants, and work with the U.S. Attorney’s office to prosecute targeted employers before arresting employees at work sites for civil immigration violations.

Employers should continue to maintain proper and concise I-9 employment eligibility verification records for each of its employees, and be aware that the newest version for Form I-9 must be used (revision dated 02/02/09) for all new hires.  It is recommended that the newest I-9 form also be used when re-verifying existing employees.  The latest version of Form I-9, which lists changes in acceptable employment verification documents, can be found online by clicking here.

Update on the Department of Labor’s New iCert Web Portal

The Department of Labor (DOL) recently announced that the previous Labor Condition Application (LCA) online system will remain operational until June 30, 2009.  This means that LCAs can be submitted for approval through the old online system until June 30, 2009.  After this date, all LCAs must be submitted to the DOL through the new iCert web portal.  By late summer 2009, the iCert web portal will be the only system for employers to submit LCAs and permanent labor certification (PERM) applications to the DOL. 

The DOL published a fact sheet describing the features of the new iCert Web Portal and it is available online by clicking here.

A Labor Condition Application (LCA) is a critical component of the H-1B and E-3 nonimmigrant worker petition and application process.  An approved LCA confirms that the intended H-1B or E-3 worker will be paid no less than the prevailing wage for the area of intended employment, as determined by the DOL.  Generally, the old LCA process involved an electronic submission to the DOL resulting in an almost instantaneous computer generated response and approval.  Under iCert, the LCA process will now involve review of the application by a DOL wage analyst and will likely take between 7 to 10 days for a response and approval. 

The DOL indicates that this type of detailed LCA review works towards preventing LCA fraud and ensuring that the LCA process is utilized as intended by the programs governing federal regulations.  The DOL iCert Web Portal can be found online by clicking here.

Lawmakers Pushing for Increased Immigration Enforcement the Within H-1B and L-1 Visa Programs

In late April 2009, Senators Dick Durbin (D-IL) and Chuck Grassley (R-IA) introduced the H-1B and L-1 Visa Reform Act of 2009 (S. 887).  The bill is based on a similar bill introduced by the Senators in 2007 (S. 1035).  The bill seeks to expand the investigative authority of federal agencies and significantly increase employers’ obligations when hiring foreign nationals in H or L nonimmigrant worker status.  Specifically, the bill seeks to expand the authority of the Department of Labor (DOL) and Department of Homeland Security (DHS) to initiate investigations and audits against employers without prior notice and impose penalties for violations. 

The text of the H-1B and L-1 Visa Reform Act of 2009 (S.887), is available online by clicking here.

The bill has been referred to the Senate Committee on the Judiciary and its prospects for being enacted into law are unclear.  However, its introduction is a clear demonstration that increased immigration enforcement remains an important topic in the continuing debate on possible comprehensive immigration reform.

If you have any questions or would like additional information about I-9 compliance, ICE work site enforcement issues, the DOL iCert Web Portal, topics on immigration legislation, or require assistance with any other immigration matter, please contact Lynda Zengerle at (202) 429-8170 or lzengerle@steptoe.com; or Joan Claxton at (202) 862-5733 or jclaxton@steptoe.com.  

For questions specifically regarding international tax or withholding issues, please contact Stanley Smilack at (202) 429-6464 or ssmilack@steptoe.com.