Officials are quitting the IRS en masse in protest of cooperation with the Immigration Police

Top IRS officials are preparing to resign after the Trump administration forced the agency to use confidential tax data to help deport immigrants, The New York Times.

The agreement between the Internal Revenue Service (IRS) and Immigration and Customs Enforcement (ICE), unveiled April 7, represents a major departure from the agency's longstanding policy of keeping data provided by undocumented immigrants confidential.

Under the terms of the agreement, ICE can request information from the IRS about people who have been ordered to leave the United States or who are the subject of an investigation. The two agencies have not yet shared information.

Federal law strictly regulates access to tax information, protecting home addresses, income records, and other data from being shared even with other government agencies. IRS officials have been raising concerns for weeks about the Trump administration’s plan to use the agency to facilitate deportations. The IRS has warned that it could be illegal.

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The agreement has created further instability at the top of the agency, which has already experienced massive layoffs and several leadership changes during the busiest period of the year, when millions of Americans file taxes.

Among those leaving is Melanie Krause, the acting head of the Internal Revenue Service, who plans to accept the administration's final offer of a delayed retirement, according to five people familiar with the matter.

The planned departure of Krause, who took over the agency less than two months after the previous interim chief stepped down, came as a surprise to IRS employees, the sources said. She had previously been considered close to Elon Musk's Department of Government Effectiveness.

Several other senior IRS officials, including the chief financial officer, chief of staff and chief risk officer, have also left or are preparing to leave, three people familiar with the matter said.

Kathleen Walters, the agency's chief privacy officer, is also accepting her resignation after providing the court with a statement about an information-sharing agreement with ICE, sources said.

As of the evening of April 8, some current and former IRS employees were left wondering who would be the next IRS chief. President Trump has nominated Billy Long, a former Republican congressman with little tax experience, to lead the agency. Long is awaiting Senate confirmation.

While the Trump administration has pushed for several deep changes at the IRS, it is the push to challenge decades of tax privacy safeguards that has caused the most concern within the agency.

"This is unprecedented," said Nina Olson, executive director of the Taxpayer Rights Center and a former top IRS official.

There are limited exceptions to the ban on sharing tax information. The Trump administration will rely on a clause allowing such data to be used in criminal investigations. The agreement repeatedly references a law that would penalize migrants who fail to leave the United States despite a court order.

A Treasury Department spokesman said the agreement "builds on longstanding authorities granted by Congress that serve to protect the privacy of law-abiding Americans and effectively prosecute criminals." The spokesman declined to comment on the departure of Krause and other senior IRS officials.

Many undocumented immigrants pay taxes to improve their financial prospects for federal programs like Social Security. Immigration activists and tax lawyers say they have long trusted the IRS to protect the privacy of immigrants’ tax information. Advocacy groups have filed a lawsuit to try to block the sharing of data.

Even the possibility that the federal government could use tax information to deport people is already causing anxiety among undocumented immigrants. While the data ICE requested is blacked out in court filings, previous drafts of the agreement sought to obtain proof of migrants’ home addresses.

Audrey Casillas, who helps low-income residents in the Los Angeles area file their taxes, has noticed fewer people showing up this year because everyone is afraid of being deported.

"The fear is real," Casillas said. "There are a lot of no-shows. Clients ask us, 'Will ICE be there when we go to file our returns?'"

In many cases, illegal immigrants use a fake Social Security number — such as someone else's number, a fictitious string of numbers, or a number previously issued with a work permit — to take regular jobs rather than receive cash payments for unofficial labor. Their employers withhold taxes from their wages.

According to a report by the Yale Budget Lab, undocumented migrant workers paid $2023 billion in federal taxes in 66, of which about $43 billion was in payroll taxes that fund Social Security and Medicare.

To file taxes this spring, ICE allows undocumented workers to use a nine-digit code called an Individual Taxpayer Identification Number (ITIN). The migrants can use it to get a driver’s license or take out a loan. In the 2022 tax year, about 3,8 million returns were filed with at least one ITIN, though not all of those holders are undocumented, according to the agency.

Undocumented immigrants are not eligible for many tax breaks, but they can get a refund in the spring if they had too much tax withheld during the year. Francine Lipman, a law professor at the University of Nevada, Las Vegas, said she advises her undocumented immigrant clients to hold off on filing their taxes, even if that means delaying or forgoing their refund.

"We recommend pausing and considering applying for an extension," she said. "This group is typically low-income, so tax refunds are an important part of their income, and some undocumented migrants still risk filing taxes."

Over time, however, economists expect fewer migrants to accept formal employment if they fear their tax information could be used to deport them. That will ultimately lead to lower tax revenues. The Yale Budget Lab estimates that the loss from reduced tax payments by undocumented immigrants could be as much as $313 billion over a decade.

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It’s unclear how many illegal immigrants the IRS-ICE agreement could target. The document indicates that the primary targets would be migrants who have been ordered to leave the country. ICE officials recently told their IRS counterparts that they hoped to use tax data to deport up to seven million people, according to four people familiar with the matter.

For those who had urged illegal immigrants to trust the IRS to keep them safe, the prospect of a sudden reversal of position came as a heavy blow.

“A lot of people feel guilty,” said Angela Divaris, an attorney with Greater Boston Legal Services. “And for me, it’s really hard to know that I was one of those people who said, ‘Follow the rules, come out of the shadows.’”

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