A recent agreement between the Internal Revenue Service and Immigration and Customs Enforcement could result in billions in lost annual revenue, NBC News reported on Tuesday.
Last week, an agreement signed by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem allowed for the IRS to share tax data of illegal migrants with Homeland Security personnel. The agency has agreed to turn over information about undocumented immigrants who DHS says are already facing deportation orders and are under federal criminal investigation, including for the crime of failing to leave the country. Sources said the agreement was one of several reasons that prompted acting IRS commissioner Melanie Krause to announce her resignation.
Critics argue the move could result in nearly $100 billion in lost annual revenue. According to the Institute on Taxation and Economic Policy, illegal immigrants paid $96.7 billion in state, federal, and local taxes in 2022. With roughly $59.4 billion of that figure going to the federal government and $37.3 billion going to state and local governments, the institute assumes that if only 10% of illegal immigrants forgo their tax filings this year the government will lose $9.5 billion in revue.
Tom Bowman, a policy counsel with the Center for Democracy and Technology's security and surveillance project said the agreement will result in fewer filings from legal residents as well. "The biggest issue from a revenue standpoint is that opening up tax records for immigration enforcement is going to reduce tax compliance of immigrants, whether undocumented or not, and that will have a significant impact on tax revenue," he said.
The new agreement is a departure from what was previously communicated to illegal immigrants by immigration attorneys and advocates that their tax information would not be used as a mechanism for deportation. Critics argue the change will further damage the public trust in government and lead to less tax compliance across all Americans. Murad Awawdeh, the president and CEO of the New York Immigration Coalition slammed the new agreement saying, "This is not just an attack on undocumented immigrants. It’s an attack on all people who call this country home."
Assistant DHS Secretary Tricia McLaughlin defended the administration's position saying that Trump is merely doing what should have been done decades ago. "Information sharing across agencies is essential to identify who is in our country, including violent criminals, determine what public safety and terror threats may exist so we can neutralize them, scrub these individuals from voter rolls, as well as identify what public benefits these aliens are using at the American taxpayer expense."
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