Applying For Citizenship While Owing Back Taxes To The IRS

I read an article back in Canada about how much fear the IRS instills in Americans. I couldn’t believed that a government agency could be so terrifying and powerful. Guess what? Now that I live in the US, I’m terrified of the IRS! Of course I am not trying to “cheat the system” and I pay my taxes but the fear is still there. I wonder if this is common in other countries?

Strangely, I was never afraid of the Canada Revenue Agency (CRA). I’ll admit that I didn’t file my Canadian taxes the first two years after high school when I held a part-time job. No one came to the door looking for me. No one sent any letters asking why I hadn’t filed taxes.

Do you know why? Because THEY owed me money! Once I did file my taxes, I got a large tax return back. Since this experience, I file my taxes every single year.

If you are close to applying for citizenship, be sure to have all of your tax transcripts. Missing just one year of filing your taxes will make you ineligible to submit the N-400 form for naturalization. I guess they don’t want you to become a citizen if you don’t abide by the rules of the United States.

Owing Back Taxes and Good Moral Character

As you probably know, one of the requirements for U.S. citizenship is that you show “good moral character.” This is very important when determining whether you are eligible to apply for citizenship. Of course this doesn’t mean showing that you’re better than the average American.  It does, however, involve showing that you have behaved well, including paying your taxes.

The naturalization application Form N-400 issued by USCIS specifically asks about whether you have paid the taxes that you owe.

However, missing a tax payment doesn’t mean you are forever barred from U.S. citizenship. The important thing now is that you do everything possible to fix the situation. This will most likely involve filing your tax return and including a payment for the basic amount and any applicable penalties. Or, if you still can’t afford the full tax bill, you may be able to work out a payment plan with the IRS.

Evidence that the applicant is complying with such a payment plan has, in some cases, been accepted by USCIS as sufficient proof of good moral character.

Still, this is a tricky situation. Your best bet is to get expert help from both a tax professional and an immigration attorney. The immigration attorney, for example, can help you by writing a persuasive letter to accompany your N-400 application, explaining why your failure to pay taxes does not indicate a lack of good moral character. The attorney can also help you collect and present other evidence of your good moral character, for example by presenting letters and documents showing your community involvement, dedication to family, participation in religious worship activities, and so forth.

Options When You Owe Back Taxes

So here is an example where you can still apply for citizenship:

You haven’t filed your taxes last year because you were unemployed and receiving unemployment benefits. You have now filed your taxes and are making payments on the amount you owe.

1) Payment Extension (120 days)
2) Installment Plan ( if less than 25k tax liability)
3) Installment Plan (if more than 25k tax liability)

Number 1 & 2 do not require approval from the IRS but you definitely need to call up and negotiate with them at least a week prior to applying as they may request certain documents from you to put the plan in place.

There is actually a specific question on form N-400 that asks you point blank: do you owe any Federal, State or local taxes that are overdue? There is no getting around this question even if the USCIS never contacts the IRS to check on your tax status.

The good news is that you won’t have to pay your back taxes in full to gain citizenship. You just have to file on time and make your payments to the IRS. A friend of mine owes about $5,000 to the IRS and is on a payment plan of $100/month. He was able to file for N-400 and is now waiting for his oath ceremony to be scheduled. Owing taxes doesn’t condemn you to being a permanent resident for the rest of your life, but you need to make things right with the IRS.

Refusing To File Your Tax Return or Pay Your Tax Liability

I can warm you as much as I can but I know there will be some people who will still not file their taxes. If this is a risk you are willing to take – go for it. But you will not be eligible to apply for naturalization.

Yes, you can continue to legally reside in the United States as a permanent resident but you may get a knock on your door from some IRS agents. USCIS wants to see that you are a law abiding permanent resident for you to be eligible for citizenship. By not filing your tax returns you are showing that you do not care about the laws of this country and that is not a good sign.

Even if you can’t afford to pay your tax bill in full, the IRS will work with you to set up a payment plan. There is no excuse for not filing.

Consider that it will also affect your spouse if you normally file jointly. The IRS may even garnish your wages if they find that you owe them a large some of money. This can cause stress and uncertainty for your and your spouse. I am not trying to scare you but tax evasion is a very real problem and I want to save you the pain of getting on the bad side of the IRS.

Personal Update: Sorry for the long delay in updates and posts. We were in the middle of moving and you know how stressful that is. I am back though and will be able to update a few times a week as well as answer emails.

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