From the USA Today (8/14/01):
I thought in order to have a legal job and pay taxes, you had to have a Social Security Number? I was also under the impression that illegal aliens were not able to obtain Social Security numbers. So how can they pay taxes??
Thanks for reading,
mike
I suppose that when they buy things they must pay sale taxes.
Some work under false SS numbers. But, all of them pay sales taxes, and taxes collected from utility bills, etc.
D’oh!! Forgot about Sales tax and utility taxes and the like. I took the article to mean taxes on wages.
Illegal immigrants do indeed pay taxes, possibly more per capita than many citizens and legal immigrants.
Some illegal immigrants have social security numbers (SSNs). The Social Security Act requires that a social security account be opened for anyone that earns wages. The Social Security Administration (SSA) issued thousands of SSN’s, at least, to illegal immigrants prior to 1972 due to that statutory requirement. The requirement has not been repealed or even altered since it’s original passage. Nevertheless, SSA changed its regulations in 1972 to require an applicant to submit proof of citizenship or legal residency before SSA would issue an SSN. That was especially odd because in the introduction to the amended regulation, SSA reiterated its statutory requirement to issue SSN’s to illegal aliens for federal tax purposes (see below).
SSA had, and technically still has (but more on that later), an additional statutory requirement under the Internal Revenue Code (IRC) to issue SSN’s to anyone needing one to file a federal tax return or to be claimed as a dependent on a tax return. SSA was still issuing SSN’s to illegal aliens as late as 1998 under that provision. Additionally, up until 1999, SSA was issuing SSN’s to anyone who could not otherwise get one and who needed it to meet a requirement imposed by a state government. For example, to get a drivers license.
In 1996, IRS started issuing individual tax identification numbers (ITINs). An ITIN can be used to meet any identification requirement (with the exception of the one for the earned income tax credit) imposed by the IRC. So SSA’s obligation to issue SSN’s for tax purposes has essentially been taken on by the IRS. ITIN’s can be used on bank accounts, Forms W-4, W-2, 1040, etc. The ITIN cannot serve as proof of residency for INS’s Form I-9. Therefore, many, if not most, illegal aliens show their employers bogus social security cards to satisfy the I-9 requirement. As a result, the bogus SSN shows up on their W-2. Many illegals never file a tax return. Of those that do, some file using the bogus SSN and others file using a properly obtained ITIN.
Most workers, citizen, legal and illegal alike, are over withheld. There are several reasons for that, including a complete lack of motivation on the part of the IRS to discourage the practice. An illegal who doesn’t file gives up his refund. In addition, because he used an incorrect SSN, he effectively has paid nothing into the social security system because he can’t document it, so he will receive no retirement benefits. So he pays social security taxes without the offsetting benefits.
An illegal who files using an incorrect SSN may eventually get a refund. He may forfeit his social security benefits. There are too many variables to consider all the cases. An illegal who files using his ITIN will receive his refund, but won’t get the earned income credit. Because the earned income credit was intended, among other things, to reduce a worker’s social security tax, the ITIN filer who would otherwise be eligible for EIC is taxed at a higher effective rate than a similarly situated citizen. Again, it’s a crap shoot as to whether he’ll be able to prove he has paid in to social security in order to get benefits.
Don’t forget about gas taxes! In at least one state (NC, I believe), illegal immigrants can obtain a driver’s license. Taxes are everywhere - and everyone pays them.
Why the AFL-CIO would want amnesty for illegal immigrants and not for their members who work until May to satisfy the many-headed Hydra that is the Federal Government, I’ll never know.
Am I correct in assuming that illegal immigrants can not be union members without having a valid green card?
Synergist, Thanks for the info. And while I’m very happy that someone would take the time to post so much info to a question I asked, I have one question about your reply. I was always under the assumption (bad, I know) that most illegals were hired by people under-the-table,no SSN or anything, and this allowed them to get paid by cash, at a much lower rate than minimum wage. You say that many, if not most, apply for jobs with a fake SSN card. Does this mean that they are legally working (in the eyes of the IRS) and they can try and get minimum wage? Or they don’t bother with all that crap because they are here illegally?
Thanks for reading, and thanks for your reply
Mike
I know somone who works for the IRS, and he says you wouldn’t believe the number of illegal aliens they catch because they pay income tax.
-PSM
Also, if an undocumented worker owns property, at least in Texas, they have to pay property taxes.
So, next time, some one tells you that “those demn illegals don’t pay taxes”, uh, tell to check the Straigth Dope. 
XicanoreX
No, they don’t bother because they will get fired quickly. At least in the farmworker community (outside of California), getting paid minimum wage is very, very rare. You have to remember that if you raise stink about getting paid $2.00 or $3.00 an hour, you can always be fired at any time and be replaced by some one who will.
XicanoreX
If you really, really, really, want to read more detailed information about taxes and “aliens” (as the IRS calls 'em), you can check out:
http://www.irs.gov/prod/tax_edu/teletax/tc851.html
or
http://www.irs.gov/prod/forms_pubs/pubs/p519ch04.htm
or
http://www.irs.gov/prod/forms_pubs/pubs/p5190102.htm
Happy Reading! 
XicanoreX