In a significant development, the acting commissioner of the IRS, Melanie Krause, is set to resign amid controversy surrounding a new agreement that allows the sharing of immigrants’ tax data with Immigration and Customs Enforcement (ICE). This deal aims to assist ICE in identifying and deporting undocumented individuals residing in the United States. Two sources, familiar with the situation but speaking on the condition of anonymity, confirmed Krause's impending resignation, which follows the signing of a new data-sharing document on Monday by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem.
The agreement enables ICE to submit names and addresses of undocumented immigrants to the IRS, which will then cross-verify this information against its tax records. This move has raised significant concerns among privacy advocates and experts, who argue that it undermines the privacy rights of all Americans. Krause, who has been serving as acting commissioner since February, will step down in response to this contentious decision.
The IRS has been grappling with turmoil following the Trump administration's controversial decisions regarding taxpayer data sharing. Douglas O’Donnell, the former acting commissioner, announced his retirement after nearly 40 years of service, largely in response to the uproar over the use of IRS data by the newly formed Department of Government Efficiency (DOGE). Krause's resignation follows this pattern of upheaval within the agency.
While the Treasury Department claims that the agreement aligns with President Trump’s broader agenda to secure U.S. borders, it has sparked significant backlash. Advocates for privacy rights argue that the IRS-DHS information-sharing arrangement violates privacy laws and compromises the personal information of law-abiding citizens. A Treasury official, who requested anonymity, indicated that the agreement is based on longstanding congressional authorities designed to protect the privacy of Americans while facilitating the pursuit of criminals.
Tom Bowman, policy counsel for the Center for Democracy and Technology, expressed concerns that sharing immigrant tax records with DHS could discourage tax compliance within immigrant communities. He warned that this could weaken contributions to essential public programs and create additional burdens for both U.S. citizens and nonimmigrant taxpayers. Bowman emphasized that this agreement sets a troubling precedent for potential data privacy abuses across other federal programs.
Todd Lyons, acting director of ICE, defended the agreement during a recent press conference at the Border Security Expo in Phoenix. He stated that this collaboration would aid ICE in identifying individuals who are exploiting benefits they are not entitled to and are “kind of hiding in plain sight” by using someone else’s identity. Lyons noted that the cooperation with the Treasury and other departments is strictly focused on major criminal cases.
Earlier this year, the IRS had already been called upon to assist with immigration enforcement efforts. In a letter obtained by the Associated Press, Secretary Noem requested the assistance of IRS Criminal Investigation workers to bolster the immigration crackdown. This request highlighted the IRS's increased funding, although the significant financial boost from the Democrats’ Inflation Reduction Act has since been rolled back.
A coalition of tax law experts from the NYU Tax Law Center raised alarms about the IRS-DHS agreement, stating that it threatens to violate the rights of many Americans protected under long-standing laws that safeguard tax information from unlawful disclosure. They questioned how the IRS could legally share data with DHS while adhering to taxpayer privacy statutes. The experts warned that IRS officials who approve such data sharing could be risking criminal and civil sanctions.
In response to these challenges, the memo associated with the agreement asserts that both the IRS and ICE will conduct their operations in a manner that respects and enhances individuals’ privacy rights while ensuring compliance with relevant laws and regulations.
