Tax & Accounting News

Potential Collaboration Between the IRS and ICE: What Taxpayers and Immigrants Should Know

by
Lee Reams II
on
3/25/2025
Potential Collaboration Between the IRS and ICE: What Taxpayers and Immigrants Should Know

In recent weeks, reports have surfaced indicating that the Internal Revenue Service (IRS) and Immigration and Customs Enforcement (ICE) may be nearing an agreement that would allow ICE to confirm the addresses of individuals with final removal orders by cross-referencing IRS tax data. While no final decision has been announced, the possibility has raised questions about privacy, legal boundaries, tax compliance, and the future use of government-held data.

Background

The IRS has historically been committed to protecting taxpayer confidentiality. Federal law strictly limits how tax return information can be shared, with exceptions primarily for criminal investigations or when required by court order. The agency’s stance has been reinforced over decades to ensure that individuals—regardless of their status—can file taxes without fear that their information will be used for unrelated enforcement purposes.

The Proposed Agreement

According to reports, the proposal would permit ICE to request address verifications from the IRS only for individuals who have received final removal orders. Requests would reportedly need to come from senior officials within the Department of Homeland Security (DHS), ensuring that such verifications are limited to specific, high-level cases.

Many undocumented immigrants file tax returns using Individual Taxpayer Identification Numbers (ITINs), often as part of efforts to demonstrate good standing for potential future legal residency applications. Estimates suggest that millions of undocumented immigrants comply with tax laws, generating billions in tax revenue.

Legal and advocacy groups have expressed concerns that any data sharing agreement could erode the trust between the IRS and taxpayers. A lawsuit filed by immigrant rights organizations argues that sharing tax data with ICE without explicit statutory authorization may violate federal law. A federal district court has thus far declined to block the potential agreement, but the case remains under review.

Potential Implications

For taxpayers, particularly undocumented immigrants, this agreement could have wide-ranging effects. There is concern that fear of enforcement could deter tax filings, reducing tax compliance and potentially diminishing revenue collection.

Additionally, the potential collaboration raises broader questions about how government-held data is used across agencies. If the IRS were to share taxpayer information for immigration enforcement, it could set a precedent for other inter-agency uses of confidential data in ways not previously envisioned.

Looking Ahead

As this situation evolves, it remains to be seen whether the IRS and ICE will finalize any formal agreement and, if so, how it will be implemented. Policymakers, tax professionals, and advocacy groups will likely continue to weigh in as legal challenges and public discussions unfold.

In the meantime, taxpayers and immigration advocates alike are advised to stay informed. Any changes could have far-reaching consequences for tax compliance, privacy protections, and the relationship between taxpayers and the federal government.

Bottom Line

While no official agreement has been confirmed, the reported discussions between the IRS and ICE highlight the complex intersection of tax law, immigration policy, and privacy protections. This is an issue to watch closely, as it could reshape both enforcement strategies and public trust in federal institutions.

share this post
Lee Reams II

Lee Reams II

CEO

I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.

Join 60,000 who get our weekly newsletter. No spam.

Need help selecting a firm?

Use our specialized search engine and get matched to the best accounting and tax firm for your needs.

Related Posts

Latest Posts