When Costello has had enough of his rat, he decides to ask every single person in his crew for all their personal information—including social security numbers—so that he can give it all to Colin for a background check.

While everyone is sitting around writing out their stuff, a guy named Fitzy tries to write the word "Citizens" on the envelope they're putting all their info into. But Billy helps him spell the word correctly, which prompts Fitzy to say:

FITZY: What, are you f***ing retarded or something? That ain't f***ing right. Are you kidding me? Look at this. Look. "Citizens."

The reason they decide to write the word "Citizens" is probably because they need something that would explain why the envelope contained social security numbers, which are what you get when you become a citizen of the United States. It might also be a vague reference to an Irish Nationalist character in James Joyce's Ulysses, since Scorsese has already referenced Joyce once in this movie. After all, the boys in Costello's gang are all proud Irish dudes, just like this famous Joyce character.

Billy doesn't argue with Fitzy about spelling, but that's not the point. The point is that the crossed-out word makes the envelope easy to recognize when Billy finds it later in Colin Sullivan's office. It's this envelope that instantly tells him that Sullivan is Costello's rat in the police department. It's ironic, too, because these "citizens" are the very people who are actually breaking so many of the country's laws to get ahead.