ICE signs agreement with IRS for deportation efforts; what Houstonians need to know

HOUSTON - The Internal Revenue Service can now share tax information with Immigration and Customs Enforcement. It's an agreement that was signed Monday in an effort to support the Trump Administration's deportation efforts, according to federal records. 

IRS, ICE Sign Agreement to Share Tax Information for Deportation Efforts

What we know:

The U.S. Treasury Department and the Department of Homeland Security have signed an agreement allowing the Internal Revenue Service (IRS) to share taxpayer information with U.S. Immigration and Customs Enforcement (ICE) for criminal investigations, including those connected to certain immigration violations. 

The memorandum of understanding, signed on April 7, was filed in the federal court system. It facilitates information-sharing between the IRS and ICE under specific conditions. It permits ICE to request tax records for individuals under criminal investigation, including those in violation of immigration laws.

Acting IRS Commissioner resigning over deal 

The AP reports that the acting commissioner of the IRS is resigning over the deal according to two people familiar with the decision. The AP reports that Melanie Krause, who had served as acting head since February, will step down over the new data-sharing document signed Monday by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem.

What You Need to Know About the New Agreement

Dig deeper:

The agreement allows ICE to request tax records for individuals under criminal investigation, including those facing immigration violations.

The IRS is not at liberty to share tax information on a regular basis. An exception to that is section 6103(i)(2) of the internal revenue code, which requires the IRS to disclose certain information to criminal investigators when it receives a proper request.

This agreement now loops ICE into that category while investigating criminal matters. 

Immigrants with legal documentation should not be impacted by this change with how the memorandum is currently written.  

"However, there are concerns that the scope of this agreement could expand," said Pamela M. Dones, an immigration attorney.

The memorandum outlines a number of safeguards that aim to keep tax information confidential through use and transfer. 

What does this mean for undocumented immigrants?

What's next:

The memorandum makes it clear that IRS tax information can be shared if ICE submits a proper request concerning a criminal investigation, including some immigration violations.

Undocumented immigrants can and do file taxes in the U.S. using a tax identification number rather than a social security number. 

The Institute on Taxation and Economic Policy revealed that undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022. $4.87 billion of that came from the state of Texas, the second-highest contributor in the nation next to California. 

Some worry the new agreement may cause a chilling effect, leading undocumented individuals to avoid filing taxes altogether.

"The agreement could lead to people not filing taxes, and that could be a problem, because we’re all required by law to file taxes," said Dones. 

"What we don't want to recommend, for example, is that people don't file taxes. As immigration attorneys, we use taxes to demonstrate that our clients are following the law and that they want to integrate to the U.S. But they need to be aware that there could be a criminal investigation, and they could use that information on the tax returns."

For now, the agreement is focused on individuals under criminal investigation and should not affect those who are in the country legally.