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USCIS Denies Naturalization for Tax Payment Plans and Extensions

By list.metadata.agency

The Department of Homeland Security is now scrutinizing immigrants’ tax records more closely, rejecting citizenship applications from those on IRS payment plans or who have requested filing extensions. This marks a shift from earlier practice, when willingness to pay taxes—even through payment plans—was viewed as positive evidence of good moral character. The change follows a policy memo issued last year that directed officers to adopt a “holistic” approach to evaluating good moral character, incorporating community involvement, education, and tax compliance. Prior to the memo, tax-related arrangements were not used against applicants unless a tax charge or conviction existed.

Bloomberg Law reviewed multiple naturalization denials that cited only participation in a payment plan or a filing extension. Doug Rand, a former senior USCIS official, called the practice “completely looney tunes” and predicted successful appeals. USCIS spokesman Zach Kahler defended the agency’s review of all factors, stating that ensuring tax compliance is a long‑standing legal requirement.

A filing extension does not defer the payment deadline; taxpayers must still make an estimated payment to avoid civil penalties. Applicants who requested an extension but failed to pay by the deadline, as well as those paying taxes in installments, are facing denials. Lily Axelrod, an immigration attorney in Memphis, reported a client denied after her husband took the citizenship oath. The denial cited the client’s extension request and failure to pay on time as an “unlawful act that adversely affects your moral character.”

Michelle Marty Rivera, an immigration and tax lawyer in Miami, noted that USCIS is harsher than the IRS itself, even for applicants with no criminal record. The good moral character standard has required criminal history checks since the first naturalization law, but the USCIS policy manual also states that failure to file or fully pay taxes may preclude eligibility. The manual cites denials based on convictions for tax evasion and conspiracy to defraud.

Sarah Krieger, senior policy counsel at the National Immigration Law Center, said that finding applicants lacking good moral character solely on the basis of a payment plan would violate statute, regulation, and recent policy. Eric Welsh, partner at Reeves Immigration Law Group, said 12 attorneys at his firm have received similar decisions involving extensions and payment plans, arguing that these factors do not per se indicate a lack of good moral character.

Kathleen Campbell Walker of Dickinson Wright PLLC reported a client married to a U.S. citizen was denied because of the spouse’s IRS payment plan, despite the memo stating such agreements should not be adverse. Lora Ries of the Heritage Foundation said the administration’s approach now requires immigrants to prove good moral character rather than merely avoid negative marks.

Shev Dalal‑Dheini of the American Immigration Lawyers Association noted that USCIS officers lack tax‑law training to make these determinations, and that the increased scrutiny may be a way to curb naturalizations. Sal Macias, an attorney in Phoenix, said immigrants are trying to meet a standard that constantly changes. One client, a green‑card holder of nearly 40 years, was approved for a naturalization oath but later denied because of a payment plan; the client has chosen to wait before reapplying.

The IRS has not responded to requests for comment. Bloomberg Law’s review was conducted with assistance from Erin Slowey. Reporters: Andrew Kreighbaum (akreighbaum@bloombergindustry.com) and Ximena Bustillo (xbustillo@bloombergindustry.com). Editors: Genevieve Douglas (gdouglas@bloomberglaw.com) and Ellen M. Gilmer (egilmer@bloomberglaw.com).