Several top Internal Revenue Service officials, including the acting commissioner, are preparing to quit after the Trump administration pushed the agency to use its protected tax records to help homeland security officials deport immigrants, according to people familiar with the matter.
The agreement between the I.R.S. and Immigration and Customs Enforcement, disclosed in a court filing on Monday, is a fundamental departure from decades of practice at the tax collector, which has sought to keep information submitted by undocumented immigrants confidential. Under the terms of the deal, a partially redacted version of which was submitted in the case, ICE officials can ask the I.R.S. for information about people who have been ordered to leave the United States or whom they are otherwise investigating. The two agencies have not yet shared any information, the filings said.
Federal law tightly controls taxpayer information, protecting home addresses, earnings and other data from disclosure even to other government agencies. I.R.S. officials have for weeks raised concerns about the Trump administration’s plan to use the agency to help with deportations, warning it could be illegal in negotiations over the agreement.
The deal has fueled further turmoil at the top of the agency, which had already been rocked by mass layoffs and several leadership changes during its busiest period of the year, when millions of Americans file their taxes. Among those leaving is Melanie Krause, the acting leader of the I.R.S., who is expected to take the administration’s latest deferred resignation offer, according to five people familiar with her plans.
The planned resignation of Ms. Krause, who took over the agency less than two months ago after another interim leader stepped down, has taken I.R.S. employees by surprise, the people said. Once seen as someone aligned with Elon Musk’s Department of Government Efficiency, she nevertheless concluded that she was uncomfortable with the direction of the I.R.S. under the Trump administration, the people said. The Washington Post earlier reported her planned departure.
Several other top I.R.S. officials, including the chief financial officer, the chief of staff and the chief risk officer, are also leaving or have left the agency in recent days, three of the people familiar with the moves said.
Kathleen Walters, the chief privacy officer, is also taking the resignation officer, after having provided a statement in court about the agreement to share information with ICE, the people said. Previously, the top I.R.S. lawyer had been demoted as the agreement came together and was replaced by a former Trump nominee.
It was unclear to several current and former I.R.S. officials on Tuesday night who would next lead the tax agency. President Trump has nominated Billy Long, a Republican former congressman with little background in tax, to lead the I.R.S. Mr. Long is still awaiting Senate confirmation.
While the Trump administration has pushed for several deep changes at the I.R.S., it has been the desire to challenge decades-old protections of taxpayer information that has most alarmed many at the agency.
“It’s unprecedented,” Nina Olson, who is the executive director of the Center for Taxpayer Rights and a former top I.R.S. official, said of the Trump administration’s plan.
There are narrow exceptions to the prohibition on sharing tax information, and the agreement shows that the Trump administration will rely on a carve-out allowing its use in criminal investigations. The agreement repeatedly refers to a law that penalizes migrants who have not left the United States despite having received a judicial order to do so.
A Treasury spokesperson said the agreement was “founded in longstanding authorities granted by Congress, which serve to protect the privacy of law-abiding Americans while streamlining the ability to pursue criminals.” The spokesperson did not respond to a request for comment about the departures of Ms. Krause and other top I.R.S. employees.
Many undocumented workers pay taxes, improving the financial outlook for federal programs like Social Security. Immigration activists and tax lawyers said they had long trusted that the I.R.S. would protect the confidentiality of migrants’ tax information. Advocacy groups have sued to try to block information sharing, and the Trump administration disclosed the agreement in response to that suit.
Even the possibility of the federal government using tax information for deportations has already caused concern among undocumented immigrants. While the exact data ICE is seeking from the I.R.S. is redacted in the court filing, previous drafts of the deal have shown that ICE officials have sought confirmation of migrants’ home addresses.
Audrey Casillas, who helps low-income residents of the Los Angeles area file their taxes, said fewer people were coming in to file this year because they don’t want to be deported.
“The fear is real,” said Ms. Casillas, who works on economic development efforts at the Koreatown Youth and Community Center. “There a lot of no shows. Clients are asking us: ‘Is ICE going to be there when we do our taxes?’”
In many cases, undocumented immigrants use a phony Social Security number — such as someone else’s number, a made-up sequence of digits or a number from a previous work authorization — so that they can get a conventional job, rather than employment under the table that pays only in cash. These migrants have taxes withheld from their paychecks by their employer, while others might self-report income they earn from other forms of work.
In a report, the Yale Budget Lab estimates that in 2023 unauthorized immigrant workers paid $66 billion in federal taxes, with roughly $43 billion of that taking the form of the payroll taxes that fund Social Security and Medicare.
To complete a tax return in the spring, the I.R.S. has allowed undocumented workers to submit returns using a separate nine-digit code called an individual taxpayer identification number. Migrants can also use these numbers to get a driver’s license or get a loan. In the 2022 tax year, roughly 3.8 million returns were submitted to the I.R.S. with at least one individual taxpayer identification number, though not all holders are undocumented immigrants, according to agency data.
Unauthorized migrants are not eligible for many tax benefits, but they may still receive a refund in the spring if their employers withheld too much in tax over the course of the year. Francine Lipman, a law professor at the University of Nevada, Las Vegas, said she has advised unauthorized migrants she works with to delay filing their taxes, even if it means postponing or foregoing a refund.
“We are suggesting pause and consider the opportunity to file an extension,” she said. “This population is generally speaking underpaid, so the tax refund is an important part of their cash flow needs, so some of those folks are still filing.”
Over time, though, economists expect that fewer migrants will want to work over-the-table jobs if they fear that tax information could be used to deport them. This would ultimately reduce revenue, and the Yale Budget Lab estimates that the loss from fewer undocumented immigrants paying taxes could amount to $313 billion over 10 years.
How many undocumented immigrants could be caught up in the partnership between the I.R.S. and ICE is unclear. The agreement states that migrants with orders to leave the country will be the primary target. ICE officials recently told their I.R.S. counterparts that they would hope to use tax information to help deport as many as seven million people, according to four people familiar with the remarks.
For people who have encouraged undocumented workers to trust that the I.R.S. would not help deport them, the prospect of a reversal has been difficult.
“A lot of people are feeling a lot of guilt because we told people to rely on this,” said Angela Divaris, a lawyer with Greater Boston Legal Services. “And it’s personally very difficult to know I’ve been in these spaces telling people: Comply, come forward.”
