IRS Develops Large System to Share Millions of Taxpayers’ Data With ICE

Key Takeaways

• IRS and ICE began sharing automated bulk taxpayer data in July 2025 under a new Memorandum of Understanding.
• Policy targets immigrants with final removal orders, those under federal investigation, ITIN filers, and employers.
• Experts warn loss of $313 billion in tax revenue if immigrants stop tax compliance due to fear.

A major change is underway in how the United States 🇺🇸 government handles taxpayer information and immigration enforcement. As of July 2025, the Internal Revenue Service (IRS) is building a large, automated system to share millions of taxpayers’ data with U.S. Immigration and Customs Enforcement (ICE). This marks a dramatic shift from long-standing federal policy, raising serious questions about privacy, trust, and the future of tax compliance For Immigrants.

Below is a detailed update on what has changed, who is affected, the timeline, what actions are required, and what these changes mean for pending and future immigration applications.

What Has Changed: IRS-ICE Data Sharing Agreement

On April 7, 2025, the IRS and ICE, both under the Department of Homeland Security (DHS), signed a Memorandum of Understanding (MOU). This agreement sets up a new framework for sharing taxpayer information, specifically targeting people who have final orders of removal or are under federal criminal investigation. The agreement is based on federal statutes, including 8 U.S.C. § 1253(a)(1), which deals with “failure to depart” after a removal order.

The most significant change is the creation of an automated system that allows ICE to request and receive taxpayer data in bulk. This includes names, addresses, and tax periods. The system is being built by IRS teams in Maryland and Texas. Technical experts warn that it could easily be expanded to include more personal and financial data, such as employer information and family relationships.

Who Is Affected by the New Policy

• Immigrants with Final Removal Orders: Anyone who has received a final order of removal from an immigration judge is directly targeted by this policy. ICE can now request their tax data from the IRS.
• Individuals Under Federal Criminal Investigation: If someone is being investigated for a federal crime related to immigration, ICE can also request their tax information.
• ITIN Filers: Many undocumented immigrants use an Individual Taxpayer Identification Number (ITIN) to file taxes. These individuals are now at risk of having their tax data shared with ICE.
• Employers: Companies that employ immigrants, especially those who may not have legal status, could face increased scrutiny and enforcement actions.
• Families of Immigrants: Because the system could be expanded to include family relationships, relatives of targeted individuals may also be affected.

Effective Dates and Timeline

• April 7, 2025: The IRS and ICE signed the MOU, officially starting the new data-sharing policy.
• July 2025: The IRS began developing the automated system for bulk data transfers.
• July 16, 2025: The system is actively being built, with ongoing technical work and policy development.
• May 2025: A U.S. District Court denied a request to stop the agreement, allowing the program to move forward despite legal challenges.

Required Actions for Affected Groups

For Immigrants:
– Review Your Immigration Status: If you have a final order of removal or are under investigation, be aware that your tax data may be shared with ICE.
– Seek Legal Advice: Contact a qualified immigration attorney or advocacy group to understand your rights and options.
– Continue Tax Compliance: While the new policy raises fears, failing to file taxes could hurt your chances in future legalization programs, which often require proof of tax compliance.
– Monitor Your Address: Make sure the IRS has your current address, as outdated information could lead to wrongful targeting.

For Employers:
– Strictly Follow Form I-9 Requirements: Ensure all employees have proper work authorization. The Form I-9 is the official document used to verify employment eligibility. You can find the latest version of Form I-9 here.
– Prepare for Increased Enforcement: Be ready for more worksite inspections and the possible return of Social Security Administration “no-match” letters, which alert employers to mismatches between employee records and government databases.
– Consult Legal Counsel: If you employ immigrants, especially those with ITINs, seek legal advice to ensure compliance with all laws.

For Taxpayers in General:
– Understand Your Rights: Taxpayer data is supposed to be highly protected. If you believe your information has been wrongly shared, you may have legal recourse.
– Stay Informed: Follow updates from the IRS and trusted advocacy organizations.

Procedural Details: How the Data Sharing Works

1. ICE Submits a Request: ICE sends a request to the IRS for specific taxpayer information. The request must include the person’s name, address, tax periods, and the federal criminal statute involved.
2. IRS Cross-References the Data: The IRS checks its database, including ITIN filers, to verify the information and its relevance to the investigation.
3. IRS Provides the Data: If the request meets the criteria in the MOU, the IRS gives the data to ICE.
4. Automation and Scale: The new system will allow ICE to make bulk requests and receive data with little manual review. This increases the risk of errors and overreach, as there are no clear limits on how much or how often data can be shared.

Legal and Privacy Concerns

Taxpayer data is among the most protected types of information in the federal government. Unauthorized disclosure is a felony. The new agreement relies on exceptions for criminal investigations, but many IRS lawyers and privacy experts say it likely violates long-standing privacy laws and breaks decades of promises made to immigrant taxpayers.

Several top IRS officials have resigned in protest, including Acting Commissioner Melanie Krause and Chief Privacy Officers Kathleen Walters and Teresa Hunter. They objected to the legality and ethics of the agreement.

Immigrant advocacy groups, such as Centro de Trabajadores Unidos and Immigrant Solidarity Dupage, have filed lawsuits to block the agreement. They argue it violates taxpayer privacy laws. However, in May 2025, a U.S. District Court denied an injunction to stop the data-sharing, so the program is moving forward.

Stakeholder Reactions and Official Statements

• IRS: Many IRS engineers and privacy officers have warned that the new system could damage taxpayer trust and lead to wrongful targeting, especially if ICE uses outdated or incorrect addresses.
• DHS/ICE: DHS officials, including Assistant Secretary Tricia McLaughlin, defend the agreement as necessary for enforcing immigration laws and protecting public safety. They say it focuses only on people with criminal backgrounds or final removal orders.
• Legal and Advocacy Groups: Organizations like the Public Citizen Litigation Group and the Electronic Frontier Foundation (EFF) strongly oppose the agreement. They warn it will erode trust in public institutions, discourage immigrants from filing taxes, and could result in a loss of over $313 billion in tax revenue over the next decade.

Practical Implications for Immigrants and Employers

For Immigrants:
– Chilling Effect on Tax Compliance: Many undocumented immigrants may stop filing taxes out of fear that their information will be shared with ICE. This could hurt their chances in future legalization programs, which often require proof of tax compliance.
– Risk of Wrongful Targeting: Because the system relies on IRS records, which may be outdated or incorrect, some people could be wrongly targeted for enforcement.
– Loss of Trust: The agreement breaks a long-standing promise that tax data would not be used for immigration enforcement, making it harder for the IRS to encourage tax compliance among immigrants.

For Employers:
– Increased Scrutiny: Employers who hire immigrants may face more audits and enforcement actions.
– Need for Careful Record-Keeping: Employers should make sure all employee records are accurate and up to date.
– Possible Revival of “No-Match” Letters: The Social Security Administration may start sending letters again to alert employers about mismatches in employee records, which could trigger further investigations.

For Tax Revenue and Public Institutions:
– Potential Loss of $313 Billion: Experts estimate that if undocumented immigrants stop filing taxes, the United States 🇺🇸 could lose over $313 billion in tax revenue over the next ten years.
– Erosion of Public Trust: The agreement may make it harder for public institutions to build trust with immigrant communities, which could have long-term effects on tax compliance and public safety.

Background and Historical Context

For decades, the IRS kept a strict firewall between tax data and law enforcement. This policy was meant to encourage everyone living in the United States 🇺🇸—including undocumented immigrants—to file taxes without fear of immigration consequences. The new agreement reverses this approach, following Executive Order 14161, signed on January 20, 2025, which directed federal agencies to identify and remove people unlawfully present in the country.

Future Outlook and Pending Changes

• Expansion Risk: Technical experts warn that the new system could easily be expanded to include more types of data and broader categories of people, not just those with final removal orders.
• Ongoing Legal Challenges: Lawsuits are still in progress. While the courts have allowed the program to continue for now, future rulings could change its scope or stop it altogether.
• Continued Policy Debate: The agreement is likely to remain a hot topic in debates over immigration, privacy, and tax policy. It has major implications for millions of taxpayers and the integrity of federal data systems.

Summary Table: IRS-ICE Data Sharing Agreement (2025)

What Should You Do Next?

• If You Are an Immigrant: Stay informed about your rights and the latest policy changes. Keep your tax records up to date and consult with a trusted immigration attorney if you have concerns about your status or tax filings.
• If You Are an Employer: Review your employment verification processes and make sure you are using the correct version of Form I-9. Stay alert for any new guidance from the IRS or DHS.
• If You Are a Taxpayer: Understand that your data may now be subject to new types of government review. If you believe your information has been misused, contact the IRS or seek legal help.
• For Legal Help: Reach out to organizations like the National Immigration Forum or Public Citizen Litigation Group, which are monitoring and challenging the agreement.

Where to Find More Information

• IRS: For details on taxpayer rights, privacy policies, and ITIN information, visit the official IRS website.
• DHS/ICE: For enforcement priorities and public statements, check the official DHS website.
• Legal Assistance: Advocacy groups and legal organizations are actively working on this issue and can provide guidance.

Expert Analysis and Broader Implications

As reported by VisaVerge.com, privacy advocates, tax experts, and immigrant rights groups see this agreement as a major breach of trust. They warn it will discourage immigrants from filing taxes, reduce tax revenue, and damage public confidence in government institutions. DHS and administration officials argue that the agreement is necessary for enforcing immigration law and protecting public safety, but critics say the negative consequences will be far-reaching.

The debate over this policy is likely to continue, with ongoing legal challenges and possible changes in how the system is used. For now, anyone who may be affected should stay informed, seek legal advice, and continue to comply with all tax and immigration laws.

Key Takeaways

• The IRS is building a new system to share taxpayer data with ICE, focusing on people with final removal orders or under criminal investigation.
• The policy took effect in April 2025 and is being expanded with automated, bulk data transfers.
• Immigrants, especially ITIN filers, and employers should be aware of the new risks and take steps to protect themselves.
• Legal challenges are ongoing, but the program is currently moving forward.
• The change could have major effects on tax compliance, public trust, and the future of immigration enforcement in the United States 🇺🇸.

For the most up-to-date information, always refer to the official IRS website and consult with legal professionals if you have specific concerns about your situation.

Learn Today

IRS → Internal Revenue Service, U.S. agency responsible for tax collection and enforcement of tax laws.
ICE → Immigration and Customs Enforcement, federal agency enforcing immigration laws and investigations.
Memorandum of Understanding → A formal agreement between IRS and ICE outlining data sharing terms for immigration enforcement.
ITIN → Individual Taxpayer Identification Number used by noncitizens to file tax returns without Social Security Numbers.
Final Removal Order → A legal order requiring an immigrant to leave the U.S., enforceable by immigration authorities.

This Article in a Nutshell

In July 2025, the IRS started sharing millions of taxpayers’ data with ICE using a new automated system. This policy targets immigrants with removal orders and federal investigations, raising privacy concerns and risking a significant drop in tax compliance and revenue.
— By VisaVerge.com