Podcast with Shayak Sarkar: Internal Revenue's External Borders
This podcast episode accompanies the article from Professor Sarkar: Internal Revenue's External Borders.
Transcript
SPEAKERS
Professor Shayak Sarkar, Peter Mason
Peter Mason 00:00
People usually think that all tax agencies do is ensure tax laws are followed. But for decades, the IRS has regularly facilitated immigration raids. These raids target employees, even as the IRS investigates their employer's potential tax violations. What can the state of affairs teach us about agency overreach? And what alternate paths could better align the IRS efforts with its mission?
Peter Mason 00:29
My name is Peter Mason, and you're listening to the California Law Review Podcast. Our goal is to provide an accessible and thought provoking overview of the scholarship we publish. In today's episode, we will be discussing Internal Revenue's External Borders, a piece by Shayak Sarkar, Professor of Law at UC Davis School of Law. This piece was published in Issue Five of Volume 112 in October 2024. Professor Sarkar, thank you so much for taking the time to talk with me today about your article.
Professor Shayak Sarkar 00:59
Thank you so much for having me.
Peter Mason 01:01
To begin with, can you summarize your main arguments in this piece?
Professor Shayak Sarkar 01:04
Sure. So the IRS has gone on record in cases saying that the IRS does not participate in immigration enforcement. And in many ways that would be intuitive, because people don't necessarily see a connection between immigration enforcement and the tax bureaucracy. My article's description, I would say, which is really its argument, is to counter that narrative and to show all the ways in which the IRS is actually engaged in and sometimes leading immigration enforcement, and to argue that that has problems associated with it that we should really be concerned about. But I would say that the main contribution is just to describe and organize a phenomenon that few people have paid much attention to.
Peter Mason 01:52
What motivated you to write this Article?
Professor Shayak Sarkar 01:55
I know a number of immigration lawyers, I became interested in immigration for a number of reasons, including my family's journey, but in law school working in the worker and immigrants rights advocacy clinic. And so as I remained in contact with that community of people from law school, I saw them litigating some really interesting cases. In the past, I'd written about the abstract ways in which tax policy and immigration intersect. So, for example: the availability of the Earned Income Tax Credit, whether at the federal level or the state level, for undocumented immigrants; the way that pandemic relief funds that were administered through the IRS were contingent on immigration status. But I'd never really thought about the possibility or the ways in which there was a much more visceral intersection in which IRS agents were showing up in oftentimes violent immigration enforcement actions. And so when I began to get a sense of that happening from former colleagues' work and litigation that they were bringing, I wanted to sort of step back and understand what exactly was happening and what the broader picture was.
Peter Mason 03:00
Great, and so, early on, your Article sets out what you specifically mean when you use the term immigration raids, as well as how the IRS is involved in them. Can you lay out that background for listeners?
Professor Shayak Sarkar 03:11
Immigration raids, quote end quote, as a term, is one that's utilized by scholars, courts and certainly colloquially by people, some of whom are really aware of what's going on with immigration, and others who maybe just read occasionally about it in the papers. But it's really about immigration enforcement actions in specific places and oftentimes workplaces. So we can imagine immigration raids representing government authorities, whether they're ICE agents or other police officers, entering into workplaces for the purpose of identifying immigrants, particularly undocumented immigrants, and then putting them through our immigration enforcement system that can result in deportation, but may not. As for how the IRS is involved in the raids, my Article identifies raids that are triggered by IRS investigations into employers' tax crimes, generally the failure of employers to remit payroll taxes. So what's striking is that, per my emphasis, the IRS involvement begins with the suspicion of criminal activity by employers who have the responsibility to make those payroll tax payments, and there are no allegations of tax crimes against the employees, but the workers, oftenvictims themselves, bear the substantial cost of being terrorized by law enforcement and potentially even being deported from the community they call home.
Professor Shayak Sarkar 03:18
And then, with those basic steps set out, you go on to describe two really troubling case studies of IRS collaborations and immigration enforcement. Can you tell listeners about them?
Professor Shayak Sarkar 04:41
I should just say that the two case studies that I describe are just part of a broader phenomenon, and I am trying to understand more details of some of the other cases, but I think the two highlight various facets that we should be concerned with. So the first case study is from 2008 and involves Annapolis Painting Services. One of the things that I think is really striking about this case is how there's an immigration raid on a workplace, but they actually do early morning raids at the private residences of employees who worked there. And it ends up leading to a civil rights lawsuit because many of the employees are actually lawfully present, and some are even citizens. And nonetheless, they're sleeping with their child at home and these agents wake them up in the middle of the night, the child is awoken: it's basically a SWAT team style entrance into their home. And afterwards, after one of them experiences all of that, where these agents are basically inundating them in their most private residence, then they go to their workplace. And when they go to their workplace, they realize, oh, there's also a workplace raid going on. So there's a couple of things about that story that I think I find really striking. One is that the plaintiffs and the people who experienced this lawsuit, who experienced their civil liberties being violated were citizens, so they're not undocumented immigrants, and that raises lots of questions about the protections that some of us might take for granted, and thinking about immigration enforcement is something that doesn't affect us or our families. The second part that's really interesting is at the actual workplace, where there's this IRS collaboration with ICE, and that, again, is happening because of this criminal investigation into the employers themselves for not remitting payroll taxes, the IRS agents are actually interrogating these workers. And then they pass them off to ICE, like, physically when they are done with interrogating them, they hand them over to ICE for further processing. So that collaboration is not an abstract collaboration about emails being sent. It's literally that they're standing right next to each other in this workplace. And I don't want to minimize how intense the experience is for these plaintiffs in their private residence. In the end, what happens is they actually have to move away because their child is so traumatized by what they had experienced in, again, those private residence raids that were adjacent to the workplace raids, that they had to move away. They filed this lawsuit, in part, seeking compensation for some of the damages. And the last thing that I'll say about Annapolis Painting Services is that in that case, a lot of the employees were actually victims of the crime, and the government acknowledged that just as much, because the employees were told that payroll taxes were being remitted or taxes were being paid, and because they thought taxes were being paid, their employer had actually withheld some of their wages. Only to then later find out that wages had not been remitted, and so they were basically just taking money away from the workers, without paying into the system that they thought that they had their wages paid into. So it's not just the case that many of these employees are orthogonal, or not at all, part of the criminal conduct. It's also the case that the employees can be victims of the criminal conduct that the IRS is investigating, and yet so much of the enforcement action is borne by the employees themselves. So that's, you know, that's one summary of the 2008 case study, and then the 2018 case study, which is more recent, and it's from Morristown, Tennessee. Again, similar pattern where there's a criminal investigation into the employer. They're coming to the bank and transacting in significant amounts of cash. People get tipped off that maybe they're not paying their payroll taxes either. And there ends up being another IRS, ICE, and then also Tennessee Highway Patrol collaboration to have a rate of the plant. And here we actually have images and videos that are circulating on the internet of what happened, and I actually teach it in my class, and I show them these images, and it's so striking to see these agents, armed agents with IRS jackets on next to law enforcement officers with jackets from other agencies and other law enforcement institutions on, all basically segregating workers in what looks like the color of their skin. And in the complaint that ends up being filed by the workers who were not allowed to show their proof of lawful status when they tried to do so, but instead were met with allegedly a hurl of epithets and derogatory terms, they were physically kind of confronted and corralled based off of their race, that leads to this really significant civil rights lawsuit. It's a class action that ultimately ends up being settled by the government and pays out a significant amount of money, in addition to some attempts at support for immigration relief.
Peter Mason 09:36
Yeah, and so, after you provide those case studies that help establish how the IRS isn't merely crunching numbers and making sure people pay their taxes, you spend some time articulating what you call the IRS's "militarized culture." That phrase might surprise listeners, but I think the evidence you marshal to support it is really compelling. Frankly, it wasn't what I was expecting when I decided to read an article about the IRS in the first place. Could you explain for listeners what the IRS's "militarized culture" is and how it influences the role the IRS has adopted in immigration enforcement?
Professor Shayak Sarkar 10:09
Absolutely. So it really just comes down to the fact that there is this criminal investigation unit within the IRS, because there are civil infractions and penalties that the IRS administers, but there's also tax crimes that the IRS is charged with investigating and enforcing. And one of the things that I try to point out is that even when we're thinking about it in the criminal context, if we're thinking about the IRS's Criminal Investigations Unit, we might just imagine a lot of bureaucrats sitting in cubicles looking through complicated audit statements. And that is certainly a part of the work that's being done by the IRS. But there is also the sort of law enforcement trainings, arms training, appealing to students and recent graduates by letting them know that they could participate in that armed enforcement that is also a part of the IRS criminal investigations, and that is, you know, adjacent to that white collar bureaucratic culture that we oftentimes associate with the IRS. And I'll just finish by saying that I again, am continuing to try to use FOIA to get some further information on what happened, but I think there is, at least for me, as someone who studies tax, a lack of understanding about how criminal investigations is interacting with the rest of the agency, what sort of autonomy or authority they have, and how that autonomy or authority or just lack of review within the IRS is leading to some really troubling and concerning outcomes, both for the agency itself and then certainly for some of these employees and workers that are really bearing the physical brunt of it.
Peter Mason 11:50
Yeah, and, another term you use to get at this IRS encroachment in an immigration context that seems out of its lane is mission creep. Can you explain what mission creep is how it's reflected in the IRS, is immigration practices and the problems that result from it here?
Professor Shayak Sarkar 12:06
Generally speaking, I think there's a lot of scholars and commentators who've talked about how the IRS does not necessarily have enough resources to fully enforce its tax laws for the purposes of collecting its revenue. And I think most people think of the IRS as the tax agency that's collecting tax revenue from individuals, corporations, domestic, foreign entities as well, and its job is to provide the Treasury with resources and its coffers to pay for the public programs that the federal government has. And even as we lack resources to be deployed towards that end, it is surprising, I think even probably for people who are maybe more sympathetic to immigration enforcement generally, to have IRS agents involved in that task. And maybe put another way is: I really don't think this is a partisan issue (and I think immigration enforcement oftentimes is a partisan issue) for two reasons. One is that I think generally, people would not be a fan of sending IRS agents to the border, much less sending IRS employees into these frankly relatively small payroll disputes. Not to say that it shouldn't be enforced, but I wonder about the actual amount of resources that are being deployed to what are relatively smaller amounts of revenue, and why the IRS is deploying so much of its own agents to that effort. And then I think the second part of it is also just to say that the IRS itself, you know, some people are concerned about its size, I along with other scholars and commentators are concerned about the fact that it doesn't have enough resources to collect tax revenue. But I think there's a separate group of people who are maybe more critical of it, especially among the current Republican Party, who would still then go along with the argument as to well, why are they getting involved in immigration enforcement? So I think people who have maybe very divergent views of the IRS role and its capacities would still agree on the idea that, why is the IRS getting engaged in immigration enforcement.
Peter Mason 14:01
Great, and so from there your article moves into the specific laws relevant to this whole situation. You start by reviewing the decisions about evidence that permit information from immigration raids to be used at all. And interestingly, the key Supreme Court case there actually based itself on an earlier tax law case. So could you explain those tax law origins and how they translated into the immigration raid law that we have today?
Professor Shayak Sarkar 14:27
My starting point here is to recognize that immigration raids are facilitated by the limited availability of the exclusionary rule in removal proceedings. So this allows immigration enforcement agencies like ICE and their unexpected collaborators, which, as I explain in the article, includes the IRS to cut corners in Fourth Amendment compliance. They do this with some confidence that their efforts, even if fundamentally illegal, will still result in removal of those they are arresting. What's often forgotten is that this limitation on the exclusionary rule actually has its origins in tax enforcement. In a Supreme Court case called United States v Janus, the IRS had obtained records of gambling earnings that had been obtained with an invalid warrant, and the taxpayer tried to have those records excluded from tax enforcement proceedings. But the Supreme Court recognized the ill-gotten fruit, but still said the exclusionary rule didn't apply because tax proceedings are civil, not criminal proceedings. And the court would later rely on Janus in another, quote unquote, civil case called Lopez-Mendoza. This case concerned two immigrants who were approached by INS, which was the predecessor to ICE, during immigration raids, and the workers admitted they were non-citizens. They challenged their deportation, asserting that the raids violated their Fourth Amendment rights, and they wanted to use the exclusionary rule to bar the use of their admissions in the deportation proceedings. Although the Supreme Court called these workplace raids quote unquote chaotic, and recognized a tendency for constitutional violations, it still relied on Janus to limit the use of the exclusionary rule in the removal proceedings, and so it denied the workers the relief they sought. Now, all being said, as I point out later in the paper, the limitation on the exclusionary rule is not absolute. Law enforcement can forget that Lopez-Mendoza included this important caveat where the Court said that the exclusionary rule might be appropriate for, quote, egregious violations, end quote, of the Fourth Amendment, and also said that it might revisit the rule if there developed good reason to believe that the Fourth Amendment violations were becoming widespread. So when we look at the rates that I discuss in this article, I suggest that there may be, quote unquote, good reason to believe that ICE may be engaged in widespread Fourth Amendment violations, including in its partnerships with the IRS.
Peter Mason 16:38
And in contrast to that line of Supreme Court decisions, some other legal protections actually can deter the IRS's collaboration in immigration raids. The first two you describe are information safeguards under tax law and the suppression of certain kinds of evidence under immigration regulations. Can you explain those protections to listeners?
Professor Shayak Sarkar 16:57
Sure so, Section 6103 of title 26, which is the Internal Revenue Code, provides pretty broad taxpayer privacy protections. And part of the reason that these protections actually exist is because some historical abuse of tax return and tax return information to minimize threatening political opponents, actually. And so there are these statutory protections that allow people to understand that as they are providing information to the IRS taxpayers can fulfill their taxpayer obligations, that a lot of that personal financial and other information is not going to be shared easily with other people, including other agencies, and the statute itself contemplates particular ways in which the IRS can share information, including, for example, with members of the White House or with congressional committees. But it really formalizes that process recognizing how much personal information are in these taxpayer returns. That section 6103 protection is in tension a little bit with the Freedom of Information Act FOIA, because FOIA is basically trying to get the IRS to share a lot of information. And while those tensions aren't always obvious and maybe are overplayed, one of the things that we see in the context of this intersection of the tax bureaucracy and the immigration enforcement is what I think of as this distortion of Section 6103. So you have to remember that these workers and employees are, and may very well be taxpayers themselves, and again, it's their employer that's being investigated for the tax crimes: not only is no allegation being made about the workers conspiring with the employer to commit tax crimes, but there's also no independent allegations or suggestions that the employees and workers are not abiding by their tax obligations. So they are taxpayers, and yet, when they try to seek from the IRS a full account of how they ended up being caught in these raids because of their employer's conduct, the IRS then says actually, Section 6103 does not allow us to share the information that you would like to hear, despite the existence of FOIA and what they attach 6103 to is the employer. So in other words, they're saying the employer's taxpayer privacy protection precludes us from telling you the aggrieved workers and employees what happened? Like, how did we even get here? And what is the course of events? To shed light on all of the ways in which this collaboration is unfolding, and a different way of saying that is, my Article is just a preliminary effort to organize and to expose something that's happening, but there's many parts of it that we still know very little about. And section 6103 is precluding workers, employees, but also the general public, I think, from learning more about how these collaborations are actually unfolding in a way that I don't think the statute really contemplated. And I worry about some of these court decisions in criticize them a bit in the paper.
Peter Mason 20:02
Yeah, and you mentioned that one other currently existing avenue to deterring this IRS behavior is civil rights liability. Can you explain the various paths that exist on that front, including under Section 1985, which you argue may be underappreciated?
Professor Shayak Sarkar 20:17
One of the claims that gained traction by the plaintiffs in Tennessee was a claim that public officials conspired to deprive them of their civil rights. So you'll remember again that there was a team of public law enforcement authorities that segregated them by race, subjected them to abuse and violated a number of their rights, at least under the facts that they recounted in their complaint. And so section 1985 despite the general challenges of succeeding in constitutional torts, gave them some some heft. It allowed them to move past a motion to dismiss their claims. And what they were really alleging was that there are these public actors that are working together, that are collaborating to deprive us of our civil rights. And one of the ways in which they were able to get around some Supreme Court precedent on Section 1985 that had been less helpful was by pointing out the fact that these are different agencies. So in a case Ziegler v. Abbasi, the US Supreme Court shed some doubt on the availability of Section 1985 because of the fact that the officials that were allegedly part of this conspiracy were all part of the Department of Justice, so they were in some ways part of the same entity. And in this case, that doesn't really apply precisely because you have two different agencies, one the IRS and then the other department of homeland security. So we don't have a clear or a strong holding on that particular point, but it does seem like it mattered that they were coming from two different agencies for the purposes of trying to make out their claim of the conspiracy. And that's pretty not just helpful to these particular workers, enabling them to successfully settle their class action lawsuit, but that really should raise concerns for the IRS about its own liability when it continues to collaborate with other agencies in ways that end up resulting in the deprivation of people's civil rights. And I hope that the paper, through these various case studies that we've discussed and just in sketching out how this is all happening right now, based again, off of my incomplete understanding, suggests that that's going to be a very likely product when you have these collaborations without stronger guardrails and oversight.
Peter Mason 22:39
And lastly, you finish the piece by offering some potential reforms. Specifically, you note that the California Legislature's attempts to stake out space for itself in immigration enforcement could be a model for others, before laying out some options that are more specific to the IRS. Can you describe those potential paths forward for listeners?
Professor Shayak Sarkar 22:59
Sure, so, California, as a state generally, has passed statutes that limit cooperation with immigration enforcement, including in workplaces. It does not contravene or undermine federal law, and it recognizes the federal government's authority and ability to enforce immigration, but it basically precludes people from unnecessarily collaborating with immigration enforcement in ways that are going to harm California residents in California communities. So I say that only to really just remind people that agencies and their leaders are making choices and they're operating in a broader legal framework. Because I also understand that not every state is California, and, you know, immigration federalism is a whole 'nother topic. In terms of some of the solutions that I promote, so, one is just to really think about these criminal tax investigations and how they're being designed. So in the Internal Revenue manual, which is supposed to be guiding some of these investigations, there's explicit language about making sure that when you're utilizing warrants for investigations or for seizing evidence or for entering into physical spaces, that you think about whether there's alternative means that are capable of producing the same results, and that might not produce the same harms or exercise the same costs. So even by the language of the Internal Revenue manual, like the agency's own guidelines, they seem to be ignoring that. And so when I say we need to redesign criminal investigations, I'm not saying that we need to redesign everything from scratch. There's actually a lot of guardrails that already exist, presumably within the agency, that are somehow being ignored, I think, to the agency's detriment, and certainly also to the American public's detriment. A second part of that is the fact that there are lawyers within the IRS, and I wonder if there could be more legal oversight of what is happening in the Criminal Investigation Unit, including a more careful review of the warrant for which the agency is applying and also some of the affidavits that they're submitting in support of obtaining their warrants. I just use some of some excerpts of language from the warrants in the Tennessee raid in my piece to illuminate the fact that people are using really crude racial remarks and designations in these applications for warrants, presumably that have gone through legal review at the IRS, and then a judge is granting them. And it raises just some concerns about how, frankly, kind of unprofessional this process is, again, in a way that harms the IRS as well as workers that it's interacting with. So a lot of things about redesigning the criminal in tax investigation process, again, with many of the frameworks already present, we don't have to really start from scratch, per se. The second is interagency agreement. So like the Department of Labor, for example, already has interagency agreements with ICE, in part because there have always been concerns that workplaces that might be subject to Department of Labor investigations for squelching organizing efforts or basically violating labor law, are then going to dissuade or threaten workers by trying to call immigration enforcement. And so ICE and DOL have this understanding that tries to preclude ICE from being used, like one agency being used, to undermine the goals of another agency. And I think there's something similar that can be happening in terms of trying to limit the ways in which the IRS and ICE collaborate. And I will generally say that there are reasons for the Department of Homeland Security and IRS to collaborate in ways that I don't think raise many of these concerns, including just thinking about international tax crimes, but right here in terms of the immigration raids that I'm talking about, and particularly some of these case studies, I think there's a strong case for an interagency agreement that's going to limit some of those collaborations. And then lastly, just thinking about how these employees and workers are moving on with their lives after being the victims of these immigration raids, I think there is an argument for thinking about the use of immigration relief. Some forms of immigration relief already exist by statute and can be available, including U visas. There's also discretionary immigration relief that can be available. But I think there is something to be said about prioritizing the crime and the employer's conduct, and, especially again, because employees are oftentimes the victims of those crimes, allowing them and providing them incentives to collaborate and to share information that will help the criminal investigation could certainly be furthered by allowing thoughtful immigration relief.
Peter Mason 27:47
Finally, what do you hope a listener or reader takes away from this episode more generally?
Professor Shayak Sarkar 27:53
Yeah, I would love people to understand the ways that immigration enforcement have seeped into these very unexpected and frankly disturbing corners of our life. I also think that it should really be a bipartisan issue. One of the things that I mention in the piece is how Americans for Tax Reform, which is a pretty conservative organization, has painted this picture of the IRS raising guns at small businesses, and so that is basically what is sort of happening in these workplaces and in these immigration raids. They're coming at it from a different perspective, being concerned about small businesses, but I think they share the fundamental concern about, why are armed IRS agents stalking, terrorizing, just kind of undermining business and community and the American public. And I don't know that in this really polarized moment that there's a lot of ways that people can agree about what immigration enforcement can look like, but I actually think this is an arena where people can agree this is not what immigration enforcement should look like, and so I hope people are open to rethinking some of their assumptions and maybe trying to find common ground and also recognizing how they're not completely immune from it, because again, a lot of the aggrieved workers here have been citizens or have been lawfully present in the United States. So this isn't some phenomenon that just only affects undocumented people. It affects all of us in our communities.
Peter Mason 29:22
Professor Sarkar, thank you so much for joining us and discussing your Article.
Professor Shayak Sarkar 29:26
Thank you so much for having me. I really appreciate you for putting this all together, and I really appreciate the time to share some of my ideas.
Peter Mason 29:37
We hope you've enjoyed this episode of the California Law Review Podcast. If you would like to read the Article, you can find it in Volume 112, Issue Five of the California Law Review at californialawreuview.org. For updates on new episodes and articles, please follow us on Instagram @californialawreview. A complete list of our socials is available on our website. Lastly, you can find a list of the editors who worked on this episode of the podcast in the show notes. See you next time.
