Tax Law Experts Warn About IRS Sharing Data with DHS as Internal Fallout Grows

The Trump administration’s controversial decision to share IRS data with Immigration and Customs Enforcement (ICE) has triggered widespread concern and criticism, both internally within the IRS and externally from legal experts. The move aims to enhance deportation efforts by allowing ICE agents to cross-reference the names of immigrants with tax records. However, the decision has not come without significant fallout, particularly with the impending departure of the IRS’s acting commissioner.

Internal Fractures at the IRS

On Monday, Treasury Secretary Scott Bessent and Department of Homeland Security Secretary Kristi Noem signed an agreement allowing ICE agents to access IRS tax records. This data-sharing agreement is part of a broader effort to ramp up deportations of undocumented immigrants. However, the decision has already led to internal unrest within the IRS. Reports surfaced on Tuesday that Acting IRS Commissioner Melanie Krause would be stepping down, a move linked to her objections to the new data-sharing agreement. Krause, who will officially leave on April 28, is said to have accepted a deferred-resignation offer due to her concerns over the Trump administration’s actions and her inability to influence them. In response, the IRS issued a statement praising Krause’s leadership during a challenging period, noting the agency’s focus on IT modernization and efforts to identify fraud and waste. However, Krause’s departure highlights the internal turmoil created by the new collaboration between the IRS and ICE.

Legal Concerns Over Data Sharing

Legal experts have expressed significant concerns over the implications of sharing IRS data with ICE. Tax law experts, such as those at the NYU Tax Law Center, have raised alarms about the potential for false positives in the identification process. According to their analysis, relying solely on a name and address to confirm identities could lead to wrongful arrests. For example, ICE agents could mistakenly target individuals with the same common name or outdated addresses, leading to wrongful deportations or arrests. The risks of administrative errors are heightened by the high stakes involved in deportation cases, as demonstrated by a recent incident where a man was wrongfully deported due to such an error.

The case of Kilmar Armando Abrego Garcia, who was deported to El Salvador due to an administrative mistake, has underscored these concerns. A government lawyer admitted in court that Garcia should not have been deported, but the error led to the lawyer’s firing. Legal experts argue that this type of mistake is likely to become more common with the new data-sharing agreement, potentially leading to numerous wrongful deportations or arrests.

Privacy and Legal Violations

In addition to the concerns about wrongful deportations, experts have pointed out that the IRS-DHS agreement could also violate long-standing privacy laws protecting taxpayer information. The NYU Tax Law Center highlighted the potential for the agreement to breach taxpayer privacy statutes, especially given the limited information requested by the DHS and the agency’s track record of errors in identifying individuals. The think tank warned that the agreement could set a dangerous precedent, jeopardizing the rights of many Americans and nonimmigrants alike. The risks associated with the IRS-DHS data-sharing agreement are substantial, with legal experts warning that it could lead to widespread violations of privacy and due process. As the administration moves forward with its plan, critics argue that the consequences could be far-reaching, affecting not only undocumented immigrants but potentially all taxpayers.

Looking Ahead

The new data-sharing agreement between the IRS and ICE is a highly controversial move that has sparked internal dissent and raised significant legal and privacy concerns. As the Trump administration continues to push for tougher immigration enforcement, the risks associated with this agreement—particularly wrongful deportations and violations of taxpayer privacy—remain a focal point of criticism. With the resignation of IRS Commissioner Melanie Krause and growing opposition from legal experts, the future of this data-sharing initiative remains uncertain.