IRS-ICE Immigrant Data Sharing Agreement Betrays Data Privacy And Taxpayers’ Trust

(Mis)Uses of Technology

from the destroying-trust dept

In an unprecedented move, the U.S. Department of Treasury and the U.S. Department of Homeland Security (DHS) recently reached an agreement allowing the IRS to share with Immigration and Customs Enforcement (ICE) taxpayer information of certain immigrants. The redacted 15-page memorandum of understanding (MOU) was exposed in a court case, Centro de Trabajadores Unidos v. Bessent, which seeks to prevent the IRS from unauthorized disclosure of taxpayer information for immigration enforcement purposes. Weaponizing government data vital to the functioning and funding of public goods and services by repurposing it for law enforcement and surveillance is an affront to a democratic society. In addition to the human rights abuses this data-sharing agreement empowers, this move threatens to erode trust in public institutions in ways that could bear consequences for decades. 

Specifically, the government justifies the MOU by citing Executive Order 14161, which was issued on January 20, 2025. The Executive Order directs the heads of several agencies, including DHS, to identify and remove individuals unlawfully present in the country. Making several leaps, the MOU states that DHS has identified “numerous” individuals who are unlawfully present and have final orders of removal, and that each of these individuals is “under criminal investigation” for violation of federal law—namely, “failure to depart” the country under 8 U.S.C. § 1253(a)(1). The MOU uses this basis for the IRS disclosing to ICE taxpayer information that is otherwise confidential under the tax code.  

In practice, this new data-sharing process works like this: ICE makes a request for an individual’s name and address, taxable periods for which the return information pertains, the federal criminal statute being investigated, and reasons why disclosure of this information is relevant to the criminal investigation. Once the IRS receives this request from ICE, the agency reviews it to determine whether it falls under an exception to the statutory authority requiring confidentiality and provides an explanation if the request cannot be processed. 

But there are two big reasons why this MOU fails to pass muster. 

First, as the NYU Tax Law Center identified:

“While the MOU references criminal investigations, DHS recently reportedly told IRS officials that ‘they would hope to use tax information to help deport as many as seven million people.’ That is far more people than the government could plausibly investigate, or who are plausibly subject to criminal immigration penalties, and suggests DHS’s actual reason for pursuing the tax data is to locate people for civil deportation, making any ‘criminal investigation’ a false pretext to get around the law.” 

Second, it’s unclear how the IRS would verify the accuracy of ICE’s requests. Recent events have demonstrated that ICE’s deportation mandate trumps all else—with ICE obfuscating, ignoring, or outright lying about how they conduct their operations and who they target. While ICE has fueled narratives about deporting “criminals” to a notorious El Salvador prison, reports have repeatedly shown that most of those deported had no criminal histories. ICE has even arrested U.S. citizens based on erroneous information and blatant racial profiling. But ICE’s lack of accuracy isn’t new—in fact, a recent settlement in the case Gonzalez v. ICE bars ICE from relying on its network of erroneous databases to issue detainer requests. In that case, EFF filed an amicus brief identifying the dizzying array of ICE’s interconnected databases, many of which were out of date and incomplete and yet were still relied upon to deprive people of their liberty. 

In the wake of the MOU’s signing, several top IRS officials have resigned. For decades, the agency expressed interest in only collecting tax revenue and promised to keep that information confidential. Undocumented immigrants were encouraged to file taxes, despite being unable to reap benefits like Social Security because of their status. Many did, often because any promise of a future pathway to legalizing their immigration status hinged on having fulfilled their tax obligations. Others did because as part of mixed-status families, they were able to claim certain tax benefits for their U.S. citizen children. The MOU weaponizes that trust and puts immigrants in an impossible situation—either fail to comply with tax law or risk facing deportation if their tax data ends up in ICE’s clutches. 

This MOU is also sure to have a financial impact. In 2023, it was estimated that undocumented immigrants contributed $66 billion in federal and payroll taxes alone. Experts anticipate that due to the data-sharing agreement, fewer undocumented immigrants will file taxes, resulting in over $313 billion in lost tax revenue over 10 years. 

This move by the federal government not only betrays taxpayers and erodes vital trust in necessary civic institutions—it also reminds us of how little we have learned from U.S. history. After all, it was a piece of legislation passed in a time of emergency, the Second War Powers Act, that included the provision that allowed once-protected census data to assist in the incarceration of Japanese Americans during World War II. As the White House wrote in a report on big data in 2014, “At its core, public-sector use of big data heightens concerns about the balance of power between government and the individual. Once information about citizens is compiled for a defined purpose, the temptation to use it for other purposes can be considerable.” Rather than heeding this caution, this data-sharing agreement seeks to exploit it. This is yet another attempt by the current administration to sweep up and disclose large amounts of sensitive and confidential data. Courts must put a stop to these efforts to destroy data privacy, especially for vulnerable groups.

Originally posted to the EFF’s Deeplinks blog.

Filed Under: data sharing, dhs, ice, irs, privacy, surveillance