Nanny Outing

By John Greenwald

What a strange kind of hunt it became, this search not for spies, or thieves, or traitors, but for . . . aliens? All last week across Washington, and in scores of smaller seats of government in towns around the country, there came the confessions. Commerce Secretary Ron Brown admitted that he had not paid Social Security taxes for a maid who had worked for him for about five years. In between plotting his four-part peace plan for Bosnia, Secretary of State Warren Christopher said he hired a lawyer and an accountant to take a look at his records. The inquisition reportedly eliminated as many as a dozen people from posts ranging from commissioner of Social Security to chairman of the Federal Housing Administration.

Across America, concerned taxpayers seeking redemption through reimbursement flooded government offices with calls. Most wanted to know if they owed money for their baby sitter or their housekeeper or the kid who mowed the lawn. In West Palm Beach, Florida, a perplexed person walked into an IRS office and asked for the "Zoe Baird Package" of forms. "That's all people are talking about," says Nancy Ransom, director of the Margaret Cuninggim Women's Center at Vanderbilt University. "This is not just a problem for the poor, the rich or the middle class. This is a problem for everyone."

It occurred to the White House that any law that, according to the IRS, 3 * out of 4 people disobey needs some reviewing. Out of the estimated 2 million families that employ some kind of domestic help, roughly one-quarter ever files the necessary taxes. The Administration will be "looking at everything" in connection with the rules, says Clinton spokesman George Stephanopoulos. At the same time, Dan Rostenkowski, who chairs the House Ways and Means Committee, is sponsoring a bill that would simplify filings and permit people to pay the required taxes through their own 1040 form. He also wants to raise the $50-per-quarter minimum amount that triggers Social Security taxes, set back in 1954, to $75. (Thanks to inflation, the $50 minimum would come to $600 today.) Experts argue that raising the standard much higher could deny many employees the chance to collect Social Security benefits.

There are few laws and regulations that carry with them such an enormous incentive to ignore them altogether. Under current regulations, tax cheats may have to pay twice the amount of the overdue levies plus interest. And the punishment for knowingly hiring illegal aliens can include six months in prison. "I'm trying to find out what the consequences would be for our nanny and for ourselves," says a Los Angeles technical writer. "Right now, she wants the cash and doesn't want us to pay taxes. But I'm worried. I don't want to get caught."

Actually, the IRS has long been lenient with those who voluntarily offer to pay overdue taxes. According to a policy statement issued last December, "the vast majority of nonfilers need only be concerned about filing and paying what they owe." Moreover, anyone who employs an illegal alien can pay Social Security taxes through a special irs account, and the agency says it does not automatically report such filings to the Immigration and Naturalization Service. But there is a catch: the IRS naturally notifies the Social Security Administration, and that outfit does share information with the immigration office.

Rather than run such risks, many people are simply holding back and hoping they won't get caught. But while the IRS does not routinely ask citizens whether they employ household workers, scofflaws can be detected through tax audits called for other reasons. The chances of that happening are far greater than the risk of being nabbed by the understaffed immigration service. Even so, people who voluntarily come forward to confess could swiftly find themselves without a nanny. "If someone has an illegal worker," notes a spokesman for the immigration agency, "there isn't any way to make that person legal without waiting a long period of time."

That's because household employees are part of a pool of unskilled workers who are limited to 10,000 permanent visas a year, creating a wait of 10 years or more before a nanny or other domestic can become a legal resident. Senator Edward Kennedy said he would decide after a Commission on Immigration Reform hearing this week whether to draft a bill that would ease visa quotas to allow more nannies and other household workers to remain in the country.

For now, the Nannygate scandal has stirred up passions that seem certain to outlast it. "We have these convulsions periodically," says Thomas Mann, a senior political analyst at the Brookings Institution. "Some kind of behavior comes to the surface because of a particular event, then we get a flood of publicity and obligatory surveys. Everybody points fingers, and then the tide subsides and we return to greater normalcy." While that may be true, the country's need for affordable child care is a tide that will keep on running.

With reporting by Julie Johnson and Nancy Traver/Washington