A bill would withhold taxes for workers who may be illegal immigrants.

Sen. David Hoyle, a Gaston County Democrat, said he filed the bill after hearing from the N.C. Department of Revenue that some contractors don't pay income tax.

Under the current system, contractors who have Individual Taxpayer Identification Numbers, or ITINs, instead of Social Security numbers can avoid having state income tax taken out of their paychecks.

But Hoyle said the state has no way to find those workers later on if they don't end up paying, since federal law prohibits the Internal Revenue Service from sharing information on ITINs to other government agencies.

"You can't get an address. You can't track them down. You can't audit them." he said. "Osama bin Laden could get an ITIN number and nobody would ever check him."

He said the Department of Revenue is losing "hundreds of millions of dollars" from unpaid taxes.

"Everybody should have to pay their taxes," he said. 

Kay Hagan voted to make it impossible for illegal immigrants to get driver's licenses.

A recent TV ad from the Democratic Senate candidate's campaign touts her vote for the final version of the 2006 budget, which included a provision tightening standards on licenses.

But the ad leaves out a fair bit of history on that vote.

In 2005 and 2006, Senate Democratic leaders sent legislation to toughen license standards to die in committee, and the budget provision was added by the House of Representatives.

In an earlier vote on the 2001 budget, Hagan supported making it slightly harder for illegal immigrants to get a driver's license by requiring an Individual Taxpayer Identification Number.

But that was a substitute for another Republican bill that would have made it impossible that was also sent to committee to die by Senate Democrats.

In other words, Hagan may have ultimately voted to "ban driver's licenses for illegal immigrants," but only after five years of resisting Republican efforts to do so.

U.S. Sen. Elizabeth Dole criticized Democratic rival Kay Hagan's record on illegal immigration at an N.C. Bar Association debate in Atlantic Beach on June 21, 2008.

What she said: "My opponent has voted to make it easier for illegal immigrants to get North Carolina driver's licenses."

The background: In an effort to encourage illegal immigrants to get car insurance, the N.C. Division of Motor Vehicles decided in 1998 that applicants establishing residency for a driver's license could submit a broad range of forms of identification, including papers issued by the Mexican government.

The looser standards led to reports that immigrants from other states were getting North Carolina IDs, then using those to get licenses back home.

After the Sept. 11 attacks, concerns about fraud and national security led state lawmakers to toughen standards for driver's licenses. Republican legislators sponsored bills that would have required a Social Security number, making getting a license impossible for illegal immigrants.

But Democratic leaders in the state Senate sent those bills to die in committee, so neither Hagan nor any other senator voted on them. Instead, they opted to require applicants provide either a Social Security number or an Individual Taxpayer Identification Number, which is given to all U.S. workers regardless of immigration status.

The measure, which Hagan supported, did not make it impossible for illegal immigrants to get a license, though it did make it more difficult. Over the following four years, the number of licenses issued without proof of citizenship dropped by roughly half.

Measures to toughen standards further also died in committee over the next several years. Then, in 2006, the legislature ordered the DMV to stop accepting taxpayer ID numbers, essentially making it impossible for illegal immigrants to get a license. Hagan supported that measure as well.

A Dole spokesman, Hogan Gidley, argued that the state Senate should have adopted the tougher standards earlier, and said it was still easier to get a driver's license in North Carolina than in other states after the 2001 vote.

"Social Security numbers should be the standard, and anything less than that is making it easier," he said.

Is the claim true? No. In 2001, Hagan voted to make it harder for illegal immigrants to get licenses, and in 2006 she voted to make it impossible. It's fair to say that Senate Democrats — Hagan included — could have backed stronger standards, but that's not the same thing as voting to "make it easier."

As many as 221,000 illegal immigrants got driver's licenses between 2002 and 2006.

Between Jan. 1, 2002, and Aug. 23, 2006, the N.C. Division of Motor Vehicles required either a Social Security number or an Individual Taxpayer Identification Number, which is issued to all U.S. workers regardless of immigration status.

Not all residents applying with taxpayer ID numbers were illegal immigrants, but the number of taxpayer ID-backed licenses is the best approximation since the DMV does not track immigration status.

Here are the numbers of licenses issued with taxpayer IDs:

2002: 41,881
2003: 73,926
2004: 50,555
2005: 34,888
2006: 19,732

The number of licenses issued under the 2002-2006 standards is thus a little more than half the number issued under the looser standards in place from 1997 to 2001, but substantially more than it would have been if the stricter standards had been adopted sooner.

Before 2007, North Carolina licenses were valid for five years, so the 2002 licenses have already expired. Since the legislature did not recall old licenses when it got rid of the taxpayer ID number, there are roughly 140,000 licenses issued under the old standards still in use.

The last of those licenses will expire in August of 2011.

Previously: What did Kay Hagan's 2001 vote do?

Did a 2001 measure make it harder for illegal immigrants to get a driver's license?

In reading up on this issue for a history of the state license requirements, Dome came across two figures cited in news stories that may shed some light on the effects of the bill.

First, on Oct. 31, 2001, the Charlotte Observer noted that between 1997 and 2001, the N.C. Division of Motor Vehicles issued driver's licenses to 388,000 people who did not have a Social Security number.

Then, on Sept. 14, 2006, the Greensboro News & Record noted that the DMV issued about 167,000 driver's licenses using the Individual Taxpayer Identification Number, which was accepted between 2002 and 2006.

Both figures cover roughly a four-year period in which the state had different requirements for illegal immigrants seeking licenses.

News accounts from 2001 show that many illegal immigrants rushed to get licenses in the days before the taxpayer ID number was required.

Still, if the two figures are correct, the number of licenses given to people without a Social Security number dropped by more than half after the state began requiring taxpayer ID numbers.

For opponents of illegal immigration, of course, that's still 167,000 more licenses than would have been issued if legislators had adopted stricter standards in 2001, instead of waiting until 2006.

Did Kay Hagan's vote in 2001 hurt or help illegal immigrants applying for driver's licenses?

That depends on who you ask. The U.S. Senate candidate has been attacked by groups that oppose illegal immigration for her vote on the provision, but supporters say it actually made it tougher for immigrants to get a license.

The debate began in the late 1990s, when state officials relaxed the standards for driver's licenses in an effort to encourage illegal immigrants to get licenses and car insurance.

After the Sept. 11 attacks, Republican legislators called for the state to stop giving licenses to illegal immigrants. The Democratic leadership responded by tightening requirements, but they stopped short of making it impossible for immigrants to get a license or recalling old licenses.

Activists argue that Hagan's vote for the budget bill — and therefore the measure — helped illegal immigrants get licenses. But former state Sen. Wib Gulley, who helped author the provision, says that's incorrect and unfair.

"It actually tightened the requirements for a license," he told Dome.

More after the jump.

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A brief timeline of N.C. driver's license ID requirements:

Oct. 1, 1997: The N.C. Division of Motor Vehicles begins asking applicants for a Social Security number under a law aimed at cracking down on deadbeat parents. Applicants without an SSN, including illegal immigrants, are not turned away, however.

August 1998: Under an internal policy, the DMV begins accepting the matricula consular, the servicio militar nacional and the credencial para votar, three forms of identification issued by the Mexican government.

Jan. 1, 2002: The DMV begins accepting the Individual Taxpayer Identification Number, a federal ID number issued to all workers in the U.S. regardless of immigration status, as a form of identification under a provision in the state budget.

Feb. 2, 2004: Under an internal policy change pushed by Operation Stop Fraud, the DMV stops accepting the matricula consular and other foreign-issued papers as a form of identification. The matricula consular is still accepted as proof of residency, however.

Aug. 23, 2006: The DMV stops accepting taxpayer ID numbers under a provision in an omnibus technical corrections bill.

SOURCE: Division of Motor Vehicles

State driver's licenses have been restricted in the past decade.

In the late 1990s, a group of officials in Gov. Jim Hunt's administration worked with Latino leaders to address the problem of illegal immigrants driving on state roads.

Their solution was to expand the ways that the N.C. Division of Motor Vehicles could determine residency, including accepting utility bills and lease agreements. The goal was to get immigrants to drive legally and get car insurance.

After the 9/11 attacks, concerns about security led lawmakers to turn instead to the Individual Taxpayer Identification Number, which is issued to anyone working in the U.S. regardless of immigration status.

Though that added a new hoop for some illegal immigrants to get a license, it did not make it impossible. Over the following three years, the DMV issued about 179,000 licenses to people who only had taxpayer ID numbers.

In 2004, the DMV went a step further. Facing concerns about fraud and identity theft, it stopped accepting the matricula consular, a form of identification issued by the Mexican government, among other foreign documents.

And in 2006, legislators ordered the agency to stop accepting taxpayer ID numbers, making it impossible for illegal immigrants to get a state driver's license. However, they stopped short of ordering a recall of older licenses issued with the numbers.

When those licenses expire, drivers will not be able to renew them.