A controversial memo of understanding (MOU) between Immigration and Customs Enforcement (ICE) and the Internal Revenue Service (IRS) has surrounded the sharing of taxpayer data for immigration enforcement with legal and ethical storms. The IRS’s April 2025 MOU allows the agency to exchange confidential tax information with ICE to pursue individuals suspected of breaking federal immigration law. Even though the Trump administration presents this as a necessary measure to fight fraud and security issues, critics argue that it poses the risk of invading taxpayer rights, ensnaring law-abiding residents in enforcement dragnets, and chilling tax compliance by illegal immigrants.
IRC exceptions and the new MOU
The information-sharing authority of the IRS lies in Internal Revenue Code (IRC) Section 6103(i)(1), which permits disclosure of tax data to law enforcement authorities by court order for criminal investigations that are not tax-related. The April 2025 MOU formalizes the process, with ICE obligated to make requests tied to specific criminal investigations-usually immigration-related offenses such as illegal reentry or document fraud. Under the agreement:
- ICE must provide names, addresses, and data regarding investigation targets.
- The IRS cross-matches it with tax returns and forwards unspecified information to ICE.
Critics contend this differential practice is under the authority of Executive Order 14161, requiring interagency coordination to deal with national security threats from “aliens who abuse immigration laws”. Legal commentators observe IRC 6103 was passed to ensure taxpayer privacy and exceptions must be narrowly construed. Courts are still split on whether tax information is public when made public in public records, an exception that potentially broadens access for ICE.
Dangers to legal citizens and immigrant groups
ITIN filers like illegal aliens, non-resident aliens, and dependents of legal citizens are disproportionately hit by the policy. While holders of ITIN contributed $96.7 billion to taxes in 2022 without Social Security Numbers, profiling hazards face them. Grave matters include:
1. Overbroad enforcement: ICE criminal investigations are triggered by low-level offenses, but shared information can balloon cases into deportation cases. For instance, an illegal parent who reports taxes through ITIN in order to receive child tax credits can unknowingly subject their family to investigation.
2. Data matching errors: Differences in names (e.g., “Jonathan” and “Jon”) or address differences (“N St.” vs. “North Street”) can result in false identification of U.S. citizens or legal residents. The IRS itself acknowledges that no data set is ever perfect, so wrongful detentions are more probable.
3. Chilling tax compliance: Immigrant activists cite increasing reluctance to file taxes even where they are eligible for benefits, lest IRS information be used against them. It undermines decades of policy promoting tax participation despite status.
Legal challenges and public backlash
In May 2025, organizations like Centro de Trabajadores Unidos sued the Treasury Department, arguing the MOU breaks IRC 6103’s confidentiality promises and was passed without public notice. The lawsuit is asking that documents detailing the scope of the agreement be unsealed, arguing the government improperly withheld them from sight.
Simultaneously, bipartisan pushback begins to emerge. The policy erodes trust in tax administration, warn former IRS staff, and civil rights groups reference Trump-era proposal analogies blurring public safety with immigration enforcement. Pointedly, the head of the IRS’s legal division was apparently removed amidst internal controversy regarding legality of the MOU, albeit more information remains sparse.
Policy justifications and unanswered questions
The government justifies the deal as a way to fight identity theft and protect “aliens who commit crimes cannot take advantage of our tax system”. ICE says it will use the information only for criminal, and not civil immigration infractions. But criminal and civil lines are blurry; even low-level offenses such as driving without a license can lead to deportation under expanded ICE priorities.
Additionally, the opacity of the MOU creates accountability issues. While the IRS claims it will monitor ICE compliance, it has not set forth how often data is being shared, how misuse is being avoided, or whether individuals are being notified their information is going to be shared.
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