Trust Betrayed: IRS Decision To Share Tax Data With ICE Sparks Outrage And Fear Among Immigrant Communities
The recent decision by the Internal Revenue Service (IRS) to share confidential tax data with Immigration and Customs Enforcement (ICE) has ignited a firestorm of controversy, particularly in California, home to one of the nation’s largest immigrant populations. This unprecedented policy shift threatens to upend decades of trust between undocumented taxpayers and the federal government—and may have far-reaching consequences for the economy, civic life, and the principles of privacy in the United States.
This week, a memorandum of understanding signed by Homeland Security Secretary Kristi Noem and Treasury Secretary Scott Bessent allows ICE officers to request tax information on immigrants under criminal investigation or with final orders of removal—including the crime of failing to comply with a removal order. While officials insist that the agreement contains strict procedures and will be used only in criminal cases, advocates and policymakers warn the damage to immigrant trust is already done.
"I heard it from everybody," said Maria, a Southern California tax consultant who works with undocumented entrepreneurs. For years, Maria and her clients paid taxes using Individual Taxpayer Identification Numbers (ITINs), acting in good faith and fulfilling their obligations despite lacking legal status. “They’re trying to criminalize us,” she said, describing the sense of betrayal now rippling through communities that have contributed billions in taxes—over $8.5 billion in California alone in 2022, according to the Institute on Taxation and Economic Policy.
On a national scale, undocumented immigrants paid more than $96.7 billion in federal, state, and local taxes last year. Yet, as journalist Julio Ricardo Varela noted, these contributions have come with "no path to citizenship, no protection from deportation," and until now, a promise of confidentiality. That promise, advocates argue, has been shattered. "The IRS’s decision to share confidential information ... threatens the safety of thousands of workers while forcing them further into the shadows, and discourages tax compliance," said Murad Awawdeh, CEO of the New York Immigration Coalition. Experts warn that this erosion of trust may discourage not only undocumented individuals, but also their families—including U.S. citizens in mixed-status households—from filing tax returns, potentially leading to billions in lost revenue for federal and state programs.
Defenders of the IRS-ICE plan, including the Trump administration, maintain that the initiative is legally authorized and designed only to pursue criminal offenders. However, lawmakers and legal experts—including dozens of congressional Democrats and former IRS officials—have decried the move as an overreach. Senator Alex Padilla (D-Calif.) called the deal “a complete betrayal,” while Senator Adam Schiff (D-Calif.) warned that “lasting damage will be done across sectors of our economy.”
The policy also stands to undermine the civic participation of immigrants who have viewed paying taxes as a way to show good faith and integration. Doug Smith, vice president of policy and legal strategy at Inclusive Action, described “a very strong sense of betrayal and fear, which is causing this unfortunate and harmful retreat from the economy and also from civic space.”
For now, advocacy groups are mounting legal challenges to the agreement, while state and local officials debate measures to shield taxpayer information from federal authorities. The implications reach beyond just tax season: at stake is the social contract that has allowed millions to come forward, work, and contribute—often with little hope of fully belonging. As Beatriz Lopez of the Immigration Hub warns, “When trust begins to unravel, the entire fabric of the nation follows.”
The question now: can trust be rebuilt in America's tax system, or has a dangerous precedent forever changed the relationship between immigrant communities and the government? Share your thoughts in the comments below.
Related issues news
What information is IRS sharing with ICE?
While some of the memo is highly redacted, it reveals that the IRS will disclose to ICE the names and addresses of immigrants, among other information. The new data-sharing arrangement will allow ICE to cross-verify the names and addresses of immigrants inside the U.S. illegally with their IRS tax records.
Do immigration and IRS share information?
The Internal Revenue Service (IRS) will share taxpayer information about undocumented immigrants with homeland security officials, a move that will give unprecedented access to immigration enforcers to aid in deportations.
