IRS-ICE MOU Expands Tax ID Data Use; Employers Face New Considerations

The Internal Revenue Service and U.S. Immigration and Customs Enforcement signed a memorandum of understanding on April 7, 2025, allowing ICE to request certain taxpayer identity data without a court order for specific immigration criminal investigations. The agreement, which centers on people who remain in the United States after a final removal order, has already drawn court challenges and internal pushback inside the IRS. Employers are not direct targets under the deal, but businesses face fresh compliance questions as enforcement becomes more data-driven and worker fears rise.

What the agreement permits

Under the agreement, ICE can ask the IRS for a taxpayer’s name, last-known address, and relevant tax periods. The IRS will not share full tax returns, wages, bank details, or employer information.

This narrow scope matters: the deal relies on an exception to Internal Revenue Code Section 6103, which protects taxpayer confidentiality unless a law enforcement agency is preparing for a criminal case or conducting an investigation that may lead to one. ICE’s requests are expected to focus on violations of 8 U.S.C. § 1253(a)(1), the statute that makes it a crime to willfully stay in the country more than 90 days after a removal order becomes final.

Policy scope and request process

The IRS says each request from ICE must be detailed and specific. Required elements ICE must provide include:

• Individual’s name
• Tax years at issue
• The criminal statute under review (especially the post-removal order offense)
• Date and case number of the final removal order
• An explanation of why the address information is relevant to the investigation
• A certification that the data will be used only for authorized purposes

The IRS reviews each submission for “completeness and validity” before releasing any information. ICE is also required to follow IRS security rules in Publication 1075, which sets strict standards for how agencies store, use, and protect sensitive taxpayer data. For the official safeguarding rules, see IRS Publication 1075: https://www.irs.gov/pub/irs-pdf/p1075.pdf.

Important: The memorandum expressly bars the sharing of employer data. Employer names, payroll records, W-2 details, and worksite information are not disclosed under this agreement.

Despite that protection, address data associated with a taxpayer identification number can still support ICE’s field operations. Descriptions of the process indicate DHS may send the IRS spreadsheets with names and last-known addresses of targeted individuals; the IRS would match those against taxpayer identification records to return updated addresses. That matching does not require sharing employer records, but it can make home or community arrests easier—and workplace effects may follow.

The arrangement is built around the criminal enforcement lane rather than civil immigration processing. It does not create new power for ICE to access tax returns; it only opens a narrow identity channel when a criminal case is on the table or under serious investigation. The IRS says it will test each request carefully, and ICE must protect the information with the same care the IRS requires of itself.

Business impact

Although employers’ own data remains protected, the new channel could still affect hiring, retention, and tax compliance.

• Workers who use Individual Taxpayer Identification Numbers (ITINs) to file taxes may worry that filing will put them at risk.
• Tax policy analysts estimate undocumented immigrants have contributed roughly $90–$96.7 billion in federal, state, and local taxes in recent years.
• Analysts warn that even a one percentage point drop in overall tax filing could cut federal revenue by around $40 billion.

Potential employer-facing consequences:

• Rising worker anxiety and higher turnover.
• More identity issues during hiring and I-9 verification.
• Reduced paper trails that legalization or regularization programs often require (e.g., proof of tax payment).
• Increased payroll onboarding mismatches and no-shows during I-9 reverification cycles.
• A chill on voluntary tax compliance that could raise audit risk.

VisaVerge.com analysis suggests real-world effects could include more payroll mismatches, more no-shows during reverification, and greater compliance risk.

Practical employer steps

Companies should treat the memorandum as a signal and prepare accordingly. Recommended actions:

1. Refresh Form I-9 procedures
   • Ensure Section 1 is completed on day one.
   • Review acceptable documents for Section 2 within three business days.
   • Keep re-verification calendars current.
   • Official Form I-9: https://www.uscis.gov/i-9.
2. Train managers
   • Create a repeatable process for handling tentative nonconfirmations and no-match letters without discrimination.
   • Keep records of steps taken and outcomes.
3. Audit quietly and fix promptly
   • Conduct self-audits to uncover paperwork errors.
   • Correct mistakes following federal guidance and document corrections.
4. Prepare a response plan
   • Draft a workplace plan for any visit by federal agents.
   • Designate a point person and confirm who can speak for the company.
   • Practice how to protect records while complying with the law.

Legal challenges and internal dissent

The memorandum has already triggered litigation and internal resignations:

• As of October 2025, the D.C. Circuit heard oral arguments in challenges alleging the deal violates taxpayer privacy protections.
• A federal district court ordered the IRS to provide 24 hours’ advance notice before sharing any taxpayer data with ICE, temporarily slowing information flow while the court considers preliminary relief.
• Reporting from September 2025 indicated that in a single day the IRS sent as much taxpayer identity information to ICE as it had shared with all federal law enforcement agencies in an entire year before the memorandum—an early sign of the channel’s potential scale.

Internal dissent included resignations by senior IRS officials—identified as Acting Commissioner Melanie Krause, Chief Privacy Officer Kathleen Walters, and Chief Privacy Officer Teresa Hunter—who cited concerns the memorandum conflicts with taxpayer privacy law. Their departures underscore how unusual the agreement is within the agency and the potential long-term damage to public trust in Section 6103 confidentiality norms.

Immigration-law effects

From an immigration perspective, the focus on 8 U.S.C. § 1253(a)(1) is significant:

• The statute allows criminal charges against a person who willfully stays more than 90 days after a final removal order.
• Address data from the IRS could help ICE find someone to serve notices, make arrests, or coordinate with federal prosecutors.
• The agreement does not change immigration relief options, but it can affect timing and outcomes.
• Counsel for people with final orders may now counsel clients more urgently about motions to reopen, stays of removal, or requests for prosecutorial discretion, knowing address confirmation can accelerate enforcement.

Worker and community consequences

Employers should expect more questions from workers who file with ITINs. Typical worker concerns and employer impacts:

• Employees often want to file, pay taxes, and maintain records.
• If filing declines, payroll teams may see more errors, more cash-only arrangements, and more audit exposure.
• Regions with larger populations of people under final orders may see more arrests and heightened community fear.
• Managers may notice increases in requests for time off for lawyers or court appointments, or quiet drops in attendance from fearful workers.

Immediate manager guidance: keep employment eligibility checks strong, treat workers respectfully, and avoid any actions that could be perceived as retaliatory or discriminatory.

Long-term stakes and oversight

The broader revenue question will linger: if fear of the IRS-ICE pipeline pushes even a small share of taxpayers out of the system, federal and state budgets will feel it. That outcome would weaken the compliance norms the IRS needs to function.

Court oversight—and any additional guardrails the judiciary imposes—could shape how far this data-sharing goes. The D.C. Circuit’s eventual decision may:

• Keep the memorandum intact,
• Narrow it, or
• Pause it entirely.

For now, the practical steps are clear: tighten I-9 processes, train staff on fair document review, maintain relationships with immigration counsel, and advise workers to consult trusted attorneys about appeals or stays instead of ignoring notices.

Key takeaway: The agreement is narrow in data scope (no tax returns or employer records) but powerful in effect: an address match alone can change on-the-ground enforcement outcomes. Whether it endures will depend on courts, congressional scrutiny, and executive choices about balancing data access with the IRS’s promise of confidentiality.

Companies that act proactively—improving compliance and planning for worker concerns—are better positioned to avoid disruption if enforcement intensifies, VisaVerge.com reports.