Are you a Green Card holder planning to apply for U.S. citizenship? If you owe money to the IRS, have an installment payment plan, or requested extra time to file your taxes, your citizenship application could now face unexpected problems!
According to a November 5, 2026, Bloomberg Law investigation, the Trump administration has dramatically increased scrutiny of immigrants’ tax records when deciding whether they qualify for U.S. citizenship. Some immigrants are being denied naturalization even though they have no criminal history and are making payments under IRS-approved agreements.
This is a serious development that every Green Card holder considering U.S. citizenship needs to understand.
What Has Changed?
To become a U.S. citizen, an applicant must demonstrate good moral character, generally during the five years before applying, or three years for certain applicants married to U.S. citizens.
In August 2025, USCIS introduced a more comprehensive approach to evaluating good moral character. Immigration officers were directed to look beyond criminal convictions and examine applicants’ overall conduct, including their financial responsibilities, tax compliance, and contributions to society.
Now, according to Bloomberg Law, immigration attorneys across the country are reporting citizenship denials involving applicants who:
- Owe unpaid federal income taxes.
- Have entered into installment agreements with the IRS.
- Requested extensions to file tax returns but failed to pay taxes owed by the original deadline.
- Have outstanding tax obligations despite attempting to resolve them.
Previously, entering into an IRS payment arrangement was generally viewed as evidence that an applicant was taking responsibility for tax obligations. Now, some USCIS officers are treating those same arrangements as reasons to question good moral character.
Can USCIS Really Deny Citizenship Because You Have an IRS Payment Plan?
USCIS has the authority to examine tax compliance, but an IRS payment plan does not automatically disqualify someone from citizenship.
In fact, USCIS’s own Form N-400 instructions specifically contemplate applicants who owe overdue taxes and provide guidance for submitting proof of an agreement to repay those taxes.
Nevertheless, Bloomberg Law reports that attorneys have received denials involving applicants who were actively participating in payment plans.
In one reported case, an immigrant was denied citizenship because of a tax filing extension and failure to pay taxes on time, even though she had no immigration violations.
Another applicant, who had held a Green Card for nearly 40 years, reportedly had his naturalization denied because of an IRS installment agreement.
Immigration attorneys are questioning whether these decisions are consistent with federal immigration law and USCIS’s own policies.
Important: A Tax Filing Extension Is NOT an Extension to Pay!
Many immigrants misunderstand this distinction.
If you request an extension to file your income tax return, the IRS generally gives you additional time to submit the paperwork. However, you must still pay the taxes you owe by the original payment deadline to avoid possible penalties and interest.
For example, if you request an extension until October to file your taxes, but owe $5,000 in April, you generally must still pay that amount by the April deadline.
Under the reported USCIS approach, failure to pay on time may become an issue during your citizenship interview, even if you subsequently establish a payment plan.
What Should Green Card Holders Do Before Applying for Citizenship?
At Shepelsky Law Group, we recommend taking these precautions before submitting Form N-400:
- Review your tax history. Make sure all required federal, state, and local tax returns have been filed correctly.
- Check for unpaid taxes. Obtain your IRS account transcripts and determine whether you have outstanding balances.
- Document payment arrangements. If you have an IRS installment agreement, keep copies of the signed agreement and proof that payments are current.
- Correct mistakes before applying. Work with a qualified tax professional to address any inaccurate returns, missing filings, or unresolved tax issues.
- Speak with an immigration attorney. If you have outstanding taxes, filing extensions, or a complicated tax history, obtain legal advice before applying for citizenship.
What If USCIS Already Denied Your Citizenship Application?
A denial does not necessarily mean the end of your opportunity to become a U.S. citizen.
Depending on the circumstances, you may be eligible to request an administrative hearing by filing Form N-336, generally within 30 days of receiving the denial, or 33 days if the decision was mailed.
An immigration attorney can evaluate whether USCIS properly applied the law, considered your repayment efforts, and evaluated the circumstances surrounding your tax obligations.
Attorney Marina Shepelsky’s Advice
Do not assume that being a law-abiding Green Card holder with no criminal record guarantees approval of your citizenship application.
The current administration is applying increased scrutiny to naturalization applicants, and issues that previously presented little difficulty may now lead to requests for additional evidence or even denials.
At the same time, having tax debt or using a lawful IRS payment arrangement should not automatically mean that a person lacks good moral character. Every case deserves an individualized assessment under the law.
If you are planning to apply for U.S. citizenship, preparation is more important than ever.
At Shepelsky Law Group, we help immigrants review their eligibility, prepare naturalization applications, address complicated immigration histories, and respond to USCIS denials.
Contact Shepelsky Law Group today to schedule a consultation before filing your citizenship application.
Source: Bloomberg Law, November 5, 2026, Citizenship Hurdles Pile Up as DHS Puts Taxes Under Microscope.