Chris Parker

Originally posted by Michael D. Young
    > jeffreyhy wrote:

    >
    > > Mr. P,
    > > Sure I can point you in the right
direction - look in your yellow pages
    > > for an attorney and a
tax accountant.
    > > The self-employed are supposed to pay both
income taxes and social
    > > security contributions on their
earnings, so I believe that a SSN card
    > > is necessary. This
is what you want to verify with the tax accountant.
    > > If you
can't find the information you want about the EAD on the USCIS
    > web site, and you're smart enough to question what you read in
internet
    > > newsgroups, then you're also smart enough to know
where to get a more
    > > informed opinion. (Unfortunately, that
place isn't the USCIS NCSC, but
    > > that's another issue.)

    > > Regards, JEff
    >
    > http://www.ssa.gov/pubs/10022.ht-
mlhttp://www.ssa.gov/pubs/10022.html
    >
    > If You're Self
Employed SSA Publication No. 05-10022
    >
    > You must complete the
following federal tax forms by April 15 following any
    > year in which
you have net earnings of $400 or more:
    >
    > Form 1040 (U.S. Individual
Income Tax Return);
    > Schedule C (Profit or loss from Business) or
Schedule F (Profit or Loss
    > from Farming as appropriate; and
    > Schedule
SE (Self-Employment Tax).
    >
    > If you look at the Schedule C and SE
there are places to enter an SSN or
    > EIN, but no ITIN.
    >
    > http://www.irs.gov/pub/irs-
fill/f1040sse.pdfhttp://www.irs.gov/pub/irs-fill/f1040sse.pdf

    > http://www.irs.gov/pub/irs-
fill/f1040sc.pdfhttp://www.irs.gov/pub/irs-fill/f1040sc.pdf
    >
Plus SSA can't post your earnings unless you have an SSN


Michael,

I say you are wrong, but of course this is not legal advice
of any kind, and an accountant and/or attorney would be consulted at
some point by anyone actually doing something like this:

1) When you
get an ITIN, IRS makes it very clear, "For tax purposes only---Use your
ITIN in place of a SSN on any federal income tax return." So, you file
your Form 1040 with your ITIN, and also give your ITIN on your Schedule
C for self-employment income & taxes, in place of the SSN. This is what
ITINs are issued by the IRS for. You'd use your ITIN on the state
income tax return (if applicable) and your bank account as well, because
it is also for tax purposes only and ultimately will arrive at the IRS
on a federal income tax form, such as Form 1099-INT.

2) Form SS-4 (an
IRS form now) for an EIN specifically states they will accept an
applicant's SSN, EIN, or ITIN to issue a new EIN (Employer
Identification Number). With the EIN, a business may hire employees and
withhold payroll taxes, file a quarterly business income tax return,
etc. Of course, if this business has employees, it is required to
verify employment eligibility of the employees at the time of hire using
the INS Form I-9 process, because if it hires an employee not authorized
to work, it could be subjected to civil & criminal penalties for hiring
an unauthorized worker. The owners of the business, however, are not
employees and should not appear on the company's payroll (see more
below). BTW - A company does not need to have employees to qualify as a
business (such as when the owner does all the work as self-employment).


3) If you do not have a SSN and must pay self-employment taxes on
Schedule C, the SSA will have no choice but to put your social security
tax payment into the "Earnings Suspense Fund (ESF)." This is where all
social security taxes go when the name & social security number do not
match. If and when the individual does obtain a social security number,
they should then apply to SSA for their tax payments held in the ESF to
be credited to their new S.S. account number. Social security tax
payments held in the ESF never expire or get forfeited, but cannot be
used for calculating benefits until assigned to the actual person's
social security number.

4) You are not an employee of your own business
unless you put yourself on the payroll, which is not recommended because
of double taxation consequences (you would be taxed both on the
business's profits and again through the payroll taxes). This is
unnecessary because the business's profits are your own personal profits
so long as the business in unincorporated, a LLC, or a S corporation;
for a regular corporation, the business's profits are paid to the
shareholder(s) through Form 1099-DIV distributions and double taxation
is rule always, but in that way instead.

5) An EAD is a grant of
authorization to engage in employment under Section 274A of the
Immigration & Nationality Act. The definition of "employment" within
the law makes a clear definition of what constitutes employment and
makes a distinction between employment and working as an independent
contractor (the kind of self-employment with the greatest similarities
to employment). Consequently, if this is a legitimate business with
multiple clients/customers, business assets/liabilities, employees,
etc., an EAD is not required nor does running such a business constitute
unauthorized employment or, in general, violate any nonimmigrant
immigration status.


It also is my understanding that this is how most
sucessful of the millions of illegal immigrants in this country were
able to find and keep their "jobs"---by starting their own business,
fulfillment of the American dream. There isn't much Congress can really
do to change the law and this situation either, as it is not in the
national interest to shutdown successful businesses that generate & pay
taxable income, nor to cause "layoff" of lawful employees employed by
any illegal immigrant-owned employer by shutting down the employer's
business (think about it). And I think that is the real reason why the
IRS makes ITINs readily available through Form W-7 to any "nonresident
alien filing a U.S. tax return and not eligible for an SSN," provided
they can provide some form of reasonable photo documentation (to prevent
tax fraud) but not requiring any proof of lawful immigration status.


Perhaps slightly off-topic, but I think Bush's proposed amnesty
program for "undocumented workers" is not helpful or in the national
interest, as these people already have plenary opportunity to invest in
the American economy by starting their own business and giving U.S.
citizens and other authorized U.S. workers much-needed jobs, and upon
labor certification, to petition for a visa (or adjustment of status) to
lawfully import workers from abroad. The most he should be asking for
from Congress is an increase in the nonimmigrant work visa number caps
and a faster, easier labor certification process. But of course, he
missed that point entirely...

Again, none of this should be considered
as legal advice, as I am not an attorney nor public accountant. I also
do not advocate any form of "employment" of illegal immigrants or
unauthorized workers. In my opinion, self-employment does not
constitute employment under the INA, nor is employment creation ever a
bad thing for America, even if an out-of-status employer is doing the
hiring in a lawful manner. All of this is of course my mere
unprofessional personal interpretation of the law. Feel free to post
here any objections to my conclusions.


CP