by Brian Mahany
The U.S. Immigration and Customs Enforcement (“ICE”) folks are getting aggressive. Although much of ICE’s enforcement efforts are concentrated on keeping our borders safe, immigration agents are now looking at employers who hire undocumented workers. ICE plans on doubling the number of employer audits performed this year.
Although ICE says it not targeting certain businesses, the agency will closely scrutinize those business with a prior history of violations. Who are likely targets? Any industry that has a poor compliance record is at risk. On the top of most everyone’s list are agricultural workers (think migrant farmers), construction and hospitality businesses. Also targeted are employers who work in sensitive industries. In other words, if you run a nuclear reactor, expect ICE to be closely scrutinizing your workforce. The same holds true for private security companies that work in airports.
Individual businesses with poor compliance records are especially at risk. The Social Security Administration generates an exception report when a worker’s tax forms doesn’t match social security records or if social security numbers are being misused. As an employer, if you start receiving notices from social security, know that an ICE agent will likely follow.
What does this mean for business owners? The government will be auditing thousands of businesses across the U.S. to insure that proper safeguards are in place to prevent undocumented workers from getting hired. Amusement companies, meat packing plants, hotels and ethnic restaurants have a much greater chance of getting audited.
Unlike tax audits which usually afford plenty of advance notice, expect just 3 days from ICE. A compliance audit from immigration agents usually involves reviewing I-9 documentation, payroll records, immigration filings, copies of Social Security Administration communications and information about independent contractors.
Because so little time is given to prepare once selected for an audit, preparation should be done now well before an audit notice is received.
About the only proper way to prepare for such an audit is to conduct a self audit. If you do that, have the actual review performed by a neutral third party. Why a third party? Hiring undocumented workers is a crime and carries stiff monetary penalties. Having a competent professional go through the records in advance will help eliminate future problems and may reduce penalties if problems are found. The business that actively audits itself and relies on legal counsel is far more likely to get a better deal than the company that promises to clean up its employment practices AFTER problems are discovered.
Having qualified counsel is critical if you are selected for an audit. Very often a law firm can clean up problems before they are discovered by auditors and can help reduce penalties on problems that are discovered. The law firm must be able to mobilize on the same day, however.
The newest wrinkle are combined IRS / ICE audits. When both agencies get together it often turns criminal. We have been involved with 2 so far, 1 in New York City and 1 in Milwaukee. When federal agencies start sharing information, its never good for the client. Some jurisdictions are now forming human trafficking task forces. These multi agency groups represent a real threat for businesses with poor record keeping and problem hires.
In a nutshell, conduct a self-audit before you are visited by ICE. Some industries are more at risk than others but anyone with social security exception reports is especially at risk. If you are selected for an audit, contact counsel immediately. There is no time to waste; every hour becomes critical.
The tax attorneys at Mahany & Ertl can help with a wide variety of tax and joint task force investigations and audits. Through our select affiliates, we can also assist in conducting self audits to identify and correct problems now and avoid future penalties. For a no obligation consultation, call attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl, LLC – America’s tax lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services anywhere in the U.S.