Up until now much of the debate surrounding immigration reform has centered around providing a pathway to Citizenship for the 11 million or so undocumented people in the country. Many in this group currently work as household nannies and you can rest assured that they will be at the front of the line once the government starts accepting applications for work authorization. So how will a change in immigration laws impact the numerous people in the country who currently employ nannies “off the books”? The answer is – potentially in a big way.
What Are The Consequences of Hiring an Undocumented Nanny?
Finding a good Nanny is a very difficult task and once you find the perfect person you should hold on for dear life. That being said, many do not fully understand the possible impact of hiring an undocumented Nanny and paying him/her “off the books.” There are three distinct consequences associated with hiring an undocumented worker and these consequences range from relatively minor to severe. Here are the consequences.
First, each employer (you are considered an employer when you hire a Nanny) is required to check immigration status of new employees and you can be subject to a penalty/fine if you fail to do this. If you just forget to check status the penalties are less severe than if you knowingly hire an undocumented worker. In addition, penalties and fines increase substantially for repeat violations. All in all though, most people that hire an undocumented nanny are not dissuaded by this consequence and this consequence is categorized as the least severe.
Second, hiring an undocumented nanny could expose you to reputational risk. This is particularly the case if you are a professional regulated by a professional body or if you are running for office. There are numerous examples of public officials who have run into difficulty because of immigration violations related to their undocumented nannies.
Finally, the most severe consequence is criminal prosecution and/or jail. To understand this you should separate the immigration consequences from the tax aspect. To explain, just as employees are required to pay income tax, employers are required to pay payroll taxes for their employees. As a nanny is considered an employee an employer is required to submit these taxes to the government and this is the case whether the nanny is documented or not. Failure to pay these taxes is a felony (tax evasion) and ignorance of the law is no excuse. The key thing to note here is that even if you are not sure about the immigration status of your nanny, you should remit payroll taxes to the government. If you do this, you will only have to worry about the first two consequences outlined above which are arguably less severe. The best advice though is to hire a documented worker.
How Will Changes in Immigration Law Impact Those Who Currently Employ Undocumented Nannies?
There are several potential impacts on Households who currently hire Nannies. These range from increased enforcement (fines and penalties), having to look for a new nanny & higher wages. These are all described below.
Many see the current fines and penalties associated with hiring an undocumented worker as low and as such are willing to take the risk. The new immigration proposals though, set out to significantly ramp up enforcement and penalties (both civil and criminal) and this could spell trouble for households who have not really been subject to much enforcement in the past. It is very likely that the government will start to actively seek out employers who are not following the law and this will likely include households.
So how will the Government find out? In addition to a ramp up of enforcement, one of the key provisions of the new proposals is that all undocumented workers applying for the new immigration status will be required to file tax returns and pay back taxes and this means they will have to identify who they work for. As such, both branches of government (U.S. Citizenship & Immigration Service and the Internal Revenue Service) will know that the employer was doing something that they should not have been doing. (violating immigration law and not paying taxes). While it is unclear exactly what enforcement measures the government will take against households, you should be aware of the risks you are running and perhaps attempt to remedy your situation.
Another impact of immigration reform will be that many nannies will pursue other lines of works and many who have a nanny may quickly realize that their nanny has a different plan now that he/she can apply for any job they want. While some nannies take up the profession because they love children, others select the profession out of necessity. As some nannies will decide to peruse other interests and employers will have to ensure that they are complying with minimum wage requirements, Immigration reform could actually open up tremendous opportunity for good nannies and will likely have the overall impact of increasing wages in the profession.
What is the Best Approach For Hiring A Nanny?
Comply with the law. With current tax law and the proposed immigration reform changes you run a substantial risk if you decide to hire undocumented workers and pay them under the table. As such, you are strongly advised to check the immigration status of your Nanny before hiring him/her and set them up on payroll so that payroll taxes are regularly remitted to the government. Even if you do not have them set up on payroll, you can avoid possible felony tax evasion charges by submitting the required payroll taxes when you file your tax return.
Contact Scott Legal, P.C., www.legalservicesincorporated.com today and let us help you with your Immigration needs. You can also call us at 212-223-2964 or email us at iscott@legalservicesincorporated.com.
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