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IRS Can Share Immigration Information

ElitePersonalFinance

Last Update: March 26, 2025 • Financial News •

With the Trump administration’s newfound push to deport as many illegal immigrants as possible, one implication is reporting IRS taxes, with the anticipated reduction in tax collections due to new policies that revolve around information-sharing protocol.

According to a recent report by The Washington Post, the Trump administration is close to finalizing a deal to request taxpayer data (including personally identifying information such as names and addresses of illegal immigrants) from the IRS to be used to find these individuals.

Efforts are already underway to retrieve taxpayer data. Former IRS commissioner Doug O’Donnell recently resigned, replaced by Melanie Krause, who was more amenable to cooperating with Homeland Security officials, holding meetings with the DHS and Treasury in recent weeks.

“Attempts by the Trump administration to gain access to the confidential taxpayer databases to engage in mass removal of workers would violate the tax law that protects the privacy of all taxpayers and undermine the protections promised to every taxpayer who files tax returns with the IRS,” stated Public Citizen Litigation Group lawyer Nandan Joshi. “Attempting to gain access to personal and confidential taxpayer information crosses a line that Congress put into place after [former President] Richard Nixon used tax records to go after his enemies during Watergate.”

“The administration’s desire to speed up their deportation agenda does not justify jettisoning decades of taxpayer protections,” continued Joshi. “If this deal is being negotiated in good faith, the government should not need to keep it secret.”

How Much Taxes Do Undocumented Immigrants Pay?

According to ITEP, undocumented immigrants contribute close to $100 billion in federal, state, and local taxes (2022), a remarkable figure mainly calculated using sales taxes. It’s estimated that if the compliance rate for limited immigrants were to dip from 60% to 30%, fiscal costs would rise tremendously at more than 28 billion dollars per year, with roughly 33.9 billion going towards essential programs like Social Security and Medicare.

Ramifications of This Move

One key potential fallout over this move is a lack of desire by undocumented immigrants to go into jobs requiring employer withholding of taxes and reported pay. Instead, they may go into more cash-based businesses, which may pay even lower. As a result, sales tax revenue will decrease, affecting the country’s budget. Plus, there’s a large percentage of undocumented immigrants who are self-employed now, potentially less likely to file tax returns.

Another area this affects is poverty rates. A large percentage of ITIN-holding parents are living in households below the poverty line, so there are increased threats by the DHS towards individual taxpayer confidentiality and disastrous consequences.

Many advocacy groups have called for the disclosure of undocumented taxpayer identification to stop, including a lawsuit filed on March 7th, 2025, by Centro de Trabajadores Unidos and Immigrant Solidarity DuPage.

“The DHS attempt to access confidential taxpayer information is not only unjust, it is unlawful,” stated Ana Guajardo, executive director of Centro de Trabajadores Unidos. “These are taxpayers who trusted our government’s promise that their information would remain confidential — a promise backed by federal law.”

By the Numbers

Other vital statistics to report is that roughly 50 to 75% of undocumented workers use individual tax identification numbers or fraudulent Social Security numbers to file annual taxes. However, they do not tend to collect government benefits, which go towards paying for public services like Social Security.

Established by the IRS in 1996, the ITIN program has made it easy for all US residents to file returns and pay taxes regardless of status. Under the guise, all information would be kept under wraps. This has allowed millions of undocumented immigrants across a wide range of fields, from small businesses to essential workers, to pay taxes discreetly.

Why Has the IRS Resisted Sharing Taxpayer Data in the Past?

Historically, the IRS has placed a heavy emphasis on taxpayer information confidentiality. According to section 6103 of the Internal Revenue Code, data on tax returns are protected from unauthorized disclosure, with consequences resulting in penalties and other measures for federal officers or employees.

Second, data-sharing agreements between the IRS and DHS focus heavily on privacy and the role of the agency’s statutory authority. With arms of confidentiality now being questioned, the Trump administration has a tall task: convincing people they’re sensitive and will be protected. This is mainly because paying taxes ensures voluntary tax compliance, a critical component of the US tax system.

In a 2019 Congressional testimony on IRS confidentiality before the House Oversight Subcommittee on Government Operations, former National Taxpayer Advocate Nina Olson shared the following statement.

“Confidentiality is not a luxury; it’s essential for compliance. People pay their taxes when they believe their personal information won’t be used against them,” said Olson.

In short, let’s see how any potential breach of IRS confidentiality rules will affect the undocumented community, which has billions of dollars at stake. The tax system was founded on privacy and conventionality, and many opt into it for that very purpose.

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