The Internal Revenue Service has agreed to help homeland security officials find immigrants they are trying to deport, according to court records, committing to sharing information in what would be a fundamental change in how the tax collector uses its tightly regulated records.
In a court filing, the Trump administration said that the I.R.S. and Immigration and Customs Enforcement had reached the agreement on Monday and that the two agencies had not yet shared any information. 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.
Federal law tightly controls taxpayer information, protecting home addresses, earnings and other data from disclosure even to other agencies within the government. I.R.S. officials have for weeks warned that the Trump administration’s plan to use the I.R.S. to help with deportations could be illegal. The top I.R.S. lawyer was demoted as the agreement came together, and was replaced by a former Trump nominee.
“It’s unprecedented,” Nina Olson, 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 receiving 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.”
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 any 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 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 their taxes this year because they don’t want to be deported.
“The fear is real,” Ms. Casillas, who works on economic development efforts at the Koreatown Youth and Community Center, said. “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 only pays 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 tax 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 Internal Revenue Service with at least one individual taxpayer identification number, though not all holders are undocumented immigrants, according to I.R.S. 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 have fear tax information could be used to deport them. This would ultimately reduce revenue, and the Yale Budget Lab estimates 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 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. And it’s personally very difficult to know I’ve been in these spaces telling people: Comply, come forward,” said Angela Divaris, an attorney with Greater Boston Legal Services.