In a June 11, 2025 memo from the Department of Justice, it was announced that one of the ways in which denaturalization will be carried out, is prioritizing enforcement against those who have committed financial crimes. This comes with the estimation by the Internal Revenue Service (IRS) of tax underreporting costing the U. S. about $500B annually. This underreporting comes from a few categories of taxpayers, willfully or unwilfully, chiefly:
- U. S. Citizens
- Applicants for Individual Taxpayer Identification Numbers (ITINs)
- Applicants for Green Cards, Naturalization and U. S. citizenship
As Tax Professionals, Tax Advisors and Certified Acceptance Agents (CAAs) in particular, we have a duty to advise our clients of the requirement to file correct, timely and complete tax returns, subject to the guidelines outlined in Circular 230, IRS rules and regulations and the Department of Treasury. In light of current efforts to possibly denaturalize taxpayers who we serve as our clients, this cannot be stressed enough.
As a CAA, I regularly come in contact with clients who are foreign nationals. I always ask them of their short-, medium-, and long-term goals as it relates to becoming U. S. citizens. Whether or not they intend to seek U. S. citizenship, I also remind them that part of the morality test on the Application for Naturalization, Form N-400, are the following two questions:
- “Do you owe any overdue federal, state, or local taxes?
- “Have you ever not filed a federal, state, or local tax return since you became a lawful permanent resident?
As we know, the current administration has a bullseye on naturalized individuals and those who have received U. S. citizenship, not just illegal immigrants. CAAs in particular, come in contact with clients who are foreign nationals with a U. S. tax obligation for one reason or another. Additionally, since U. S. citizens are tasked on their income worldwide, we are dealing with domestic and foreign taxation.
This includes FBAR, FATCA, GILTI (now NCTI under the OBBBA) and other reporting requirements. And although we are not immigration specialists, we are tasked with upholding the interests of the U. S. government, directly and indirectly, chiefly:
- Department of Treasury (Internal Revenue Service)
- Department of Treasury (Financial Crimes Enforcement Network)
- Department of Homeland Security (USCIS)
Part of our due diligence and forensic documentation is not only examining the documentation presented, but also administering the Substantial Presence Test, which is a requirement of the Internal Revenue Service, which is a branch of the Department of Treasury.
In closing, our responsibilities to taxpayers become more important to serving our clients, just as our position as professionals becomes more integral to interested governing bodies. As professionals, we must continue to exercise due diligence, stay current in Circular 230 and IRS guidelines and stay abreast of directives issued by increasing number of government agencies intersecting with our positions as Tax Professionals, Tax Advisors and Certified Acceptance Agents.
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