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IRS Data-Sharing Policy Raises Deportation Fears, Threatens Tax Compliance

Undocumented immigrants reconsider filing taxes as the IRS begins sharing taxpayer data with immigration authorities, breaking decades of confidentiality assurances.

The Internal Revenue Service building in Washington, DC.
UNDISCLOSED LOCATION, CONNECTICUT - MARCH 29: An immigrant receives help in preparing her U.S. income tax forms on March 29, 2025 at an undisclosed location, Connecticut. A non-profit immigrant center is holding free sessions where tax advisors provide assistance to immigrants in preparing their tax documents. Many immigrants, including legal green card holders, have expressed extreme anxiety as the Trump administration enacts more stringent immigration policies, including mass deportations of undocumented people living in the United States. (Photo by John Moore/Getty Images)
A view of the Internal Revenue Service building in Washington on February 16, 2025.

Overview

  • The IRS has implemented a data-sharing agreement with ICE, allowing immigration authorities access to taxpayer information, a significant shift from longstanding privacy protections.
  • Undocumented immigrants, who have historically filed taxes in good faith, now face fears of deportation, leading many to question whether they should continue filing.
  • Advocates warn that the policy could lead to a sharp decline in tax compliance, with experts estimating a potential $9.5 billion annual loss in tax revenue if filings decrease by 10%.
  • Legal challenges are underway, with immigrant rights groups arguing that the agreement violates federal privacy laws by enabling bulk data collection without court orders.
  • Critics highlight the erosion of trust in government institutions, while officials defend the policy as a tool to target violent criminals, despite its broader potential applications.