According to court records, the IRS has agreed to help homeland security officials discover immigrants they are trying to deport from, and they promise to share information that would be a fundamental change in tax collectors’ use of strictly regulated records.
The Trump administration said in a court filing that the IRS, immigration and customs enforcement had reached an agreement on Monday and that the two agencies have not shared any information. Under the terms of the deal, a partially edited version was filed in the case, where ICE officials could ask the IRS for information about people ordered to leave the United States or were originally under investigation.
Federal law strictly controls taxpayer information, protects home addresses, earnings and other data, even for disclosures to other institutions within the government. IRS officials have warned for weeks that the Trump administration’s plan to use the IRS to help deportation may be illegal. When the deals came together, the highest IRS lawyer was demoted and replaced by a former Trump nominee.
“This is unprecedented,” Nina Olson, executive director of the Center for Taxpayers’ Rights and former IRS official, said of the Trump administration’s plans.
The exception to prohibiting sharing of tax information is narrow, and the agreement suggests that the Trump administration will rely on a statue that allows it to be used in criminal investigations. The agreement repeatedly refers to a law that punishes immigrants who have not left the United States despite receiving judicial orders.
A Treasury spokesman said the agreement “was established with long-term authorities granted by Congress, which aims to protect the privacy of law-abiding Americans while simplifying the ability to pursue criminals.”
Many undocumented workers pay taxes, improving the financial prospects of federal programs such as federal programs. Immigration activists and tax lawyers say they have long believed that the IRS will protect the confidentiality of immigration tax information. Advocate groups have filed lawsuits to try to block any information sharing, and the Trump administration has revealed the agreement to the lawsuit.
Even the possibility of deportation using tax information has attracted the attention of undocumented immigrants. Although the exact data of the IRS was removed in court documents ICE, a previous draft of the transaction indicated that ICE officials had sought to confirm the immigrant’s home address.
Audrey Casillas, who helps low-income residents in the Los Angeles area submit taxes, said fewer people come to submit taxes this year because they don’t want to be deported.
“Fear is real,” Ms. Casillas works on economic development efforts at the Koreatown Youth and Community Center. “There aren't a lot of shows. The client asked us: 'Will the ice be there when we pay taxes?'”
In many cases, undocumented immigrants use fake social security numbers, such as other people’s numbers, fictitious sequences of numbers or numbers authorized by previous jobs – so that they can find a regular job rather than a job paid in cash only. Employers of these immigrants retain taxes from their salaries, while others may self-report their income from other forms of work.
In a report, Yale University’s Budget Laboratory estimated that unauthorized immigrant workers paid $66 billion in federal taxes in 2023, about $43 billion in form of payroll tax funding for Social Security and Medicare.
To complete the tax returns in the spring, the IRS allows undocumented workers to file tax returns using a separate nine-digit code called a single taxpayer ID number. Immigrants can also use these numbers to obtain a driver's license or get a loan. According to IRS data, about 3.8 million returns were submitted to the IRS during the 2022 tax year, with at least one taxpayer’s ID number, although not all holders are undocumented immigrants.
Unauthorized immigrants are not eligible for many tax benefits, but they may still get refunds in the spring if employers deduct too much tax during the year. Francine Lipman, a law professor at the University of Nevada Las Vegas, said she has advised unauthorized immigration she worked with to delay filing taxes, even if it means delays or refunds.
“We recommend stopping and considering proposing opportunities for expansion,” she said. “This population is generally low-paying, so tax refunds are an important part of their cash flow needs, so some of them are still submitting.”
But over time, economists expect more and more immigrants will want to overwork if tax information is likely to be used to deport them. This will ultimately reduce revenue, and Yale University's Budget Lab estimates that less than undocumented immigrants could lose $313 billion in taxes over 10 years.
It is unclear how many undocumented immigrants are in the IRS-Ice partnership. The agreement states that immigration with orders leaving the country will be the main target. According to four people familiar with the speech, ICE officials recently told their IRS peers that they hope to use tax information to evict as many as 7 million people.
The prospect of a reversal is difficult for those who encourage undocumented workers to believe the IRS will not help deport them.
“A lot of people feel introverted because we tell people to rely on that. And, it’s hard for individuals to know that I’m telling people in these spaces: comply and stand up,” said Angela Divaris, an attorney for the Greater Boston Legal Services.
