Tax Crimes Should Be a Cause for Citizenship Denaturalization

Citizenship is a privilege for people who want to assimilate into the United States. Just like forced labor is contrary to moral character, economic crimes such as tax crimes should be as well.

The Trump administration is now more closely scrutinizing tax crimes as part of its larger scope of immigration enforcement.

According to the Migration Policy Institute, there were 24.5 million naturalized US citizens as of 2022. What many don’t know is that naturalized citizens’ status wasn’t always meant to be permanent, and the DOJ in June took some steps to prioritize denaturalization for some.

The Trump administration has indicated that significant fraud should be a basis for denaturalization when it is supported by evidence—particularly when someone poses a danger to national security, engages in human rights violations, is a member of a gang, fails to disclose felonies during the naturalization process, commits financial fraud, or engages in other crimes the DOJ deems sufficient to pursue.

Case Studies

A tax return preparer who’s a naturalized citizen earlier this summer became a headline when she was prosecuted for failing to disclose her tax crimes. In 2019, a federal judge found enough evidence for Vanessa Ben to plead guilty and later sentenced her to 12 months in prison and $219,854 in restitution to the IRS, which is approximately the tax due on the $628,644 that the government stated she earned from 2012 to 2015. The DOJ is now trying to denaturalize her.

Major headlines may indicate that simple mistakes qualify as a basis for denaturalization. But this isn’t accurate, as mistakes are the opposite of criminal intent.

Although I agree with tax crimes being a basis for immigration enforcement, this stance didn’t start with the Trump administration. Tax crimes have been a basis for denaturalization for several decades. In Costello v. INS, a naturalized Italian immigrant was subject to denaturalization in part because of tax crimes.

I was a special agent with IRS Criminal Investigation, the agency’s law enforcement branch, for more than 20 years. On many occasions, the crimes against the US government, its citizens, and its financial institutions were never linked to immigration enforcement.

Although a federal judge will warn a defendant that a guilty plea could affect their immigration status, as Ben was, I never saw it enforced.

Tax evasion undermines the economic base by which US taxpayers are required to voluntarily report their income and pay their taxes. Tax crimes create an imbalance in the marketplace, forcing a larger tax burden on the honest business owner while the dishonest business owner has a lower one. This can prompt market inequity.

Additionally, when a tax return preparer (such as Ben) has the knowledge, ability, and desire to falsify tax returns, then the amount of harm to the US Treasury can be astronomical. For 2022, the IRS estimated that $606 billion in taxes due wasn’t reported.

Ben is a prime candidate for denaturalization. She caused hundreds of thousands of dollars in damages to the federal government by defrauding the IRS. Her actions caused damage to the US and diverted the limited resources of law enforcement that could have been used elsewhere.

Good moral character has always been a requirement for naturalization. In 2015, Sammy Chang, a naturalized citizen from South Korea, was denaturalized when the government discovered that he ran a forced labor operation prior to his naturalization.

Key Takeaways

Denaturalization has been around for decades. According to the DOJ, 305 denaturalization cases were filed between 1990 and 2017. As with any court hearing, the burden of proof is for the government to show clear and convincing evidence during the judicial process.

We can have a debate on policy, which is always welcomed in our democratic republic. But let’s at least be honest: The process and criteria for denaturalization have been on the books for generations.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Robert Nordlander, an author and an IRS-CI agent from 2000 to 2021, is the founder of Nordlander CPA, a forensic accounting and tax resolution firm in North Carolina.

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