Cynthia Blum (Rutgers-Newark) has published Rethinking Tax Compliance of Unauthorized Workers After Immigration Reform, 21 Geo. Immigr. L.J. 595 (2007).  Here is the Conclusion:

While the current IRS stance of encouraging and facilitating tax compliance by undocumented workers is entirely appropriate, a new approach might be preferable under some possible versions of comprehensive immigration reform. These versions of reform would allow undocumented workers who were already present and working in this country to apply for immediate status as authorized workers and a realistic opportunity to become permanent residents and eventually citizens. At the same time, DHS would establish an efficient, fair, and accurate system for employers and workers to determine a worker’s authorization to work and would establish more economically realistic visa limits. In the context of such a dramatic reform of immigration law, the IRS should end its encouragement of tax compliance by undocumented workers and act in concert with DHS to bring employers into compliance with immigration as well as tax laws. Even though such a transformation of immigration law might worsen the plight of undocumented workers arriving in the future, it might ultimately increase the opportunities for authorized immigration.