In a sharp departure from long-standing practice, the Internal Revenue Service (IRS) entered into a formal agreement with the Department of Homeland Security (DHS) to share certain taxpayer information with U.S. Immigration and Customs Enforcement (ICE).

What Has Changed?

On April 8, 2025, the IRS signed a Memorandum of Understanding (Agreement) with ICE, which authorizes the IRS to provide ICE with taxpayer data to help locate individuals with final orders of removal and/or pending federal criminal charges.

Who May Be Affected?

•  Individual Taxpayer Identification Number (ITIN) Holders

This Agreement raises the risk that individuals who are unlawfully present in the United States and use an ITIN to file their taxes could face deportation if the IRS shares their taxpayer information with ICE for enforcement purposes.

The IRS created the ITIN in 1996 to enable individuals who do not qualify for social security number – such as unauthorized immigrants[1] – to file tax returns and comply with US tax laws.[2]

Under federal law, individuals who spend enough time in the U.S. are taxed as residents, regardless of immigration status, and must report both U.S.  and worldwide income.[3]

Although the Agreement is limited in scope – applying only to individuals with final order of removal and/or pending federal criminal charges – it nonetheless blurs the long-standing firewall between tax compliance and immigration enforcement by allowing targeted data sharing of ITIN-holder information.

• Implications for Employers of Unauthorized Immigrants. 

 Businesses that employ individuals with ITINs—or that are uncertain regarding employees’ work authorization – should take note.  Although the Agreement targets individuals with final removal orders or pending federal charges, IRS data shared with ICE could be used to initiate or support workplace enforcement actions.  Employers must ensure strict compliance with Form I-9 (Employment Eligibility Verification) procedures and understand that ITINs are not valid proof of work authorization.

What the IRS-ICE Agreement Means for Affected Individuals and Businesses?

For Individuals:

• Consult a Tax Attorney Before Filing: If you or a family member may be impacted by this Agreement, seek advice from an attorney experience in immigration and tax matters before submitting your tax return.
• Know Your Rights: ICE does not have unrestricted access to IRS data. Disclosure is limited to individuals with final orders of removal or pending federal criminal charges.  Know the limits of what can – and cannot – be shared.

For Businesses:

• Review Hiring and I-9 Compliance: Ensure your employment verification procedures strictly follow federal law. ITINs are not valid proof of work authorization and should not b used in place of Social Security Numbers.
• Safeguard Employee Data: Maintain strict confidentiality of employee records and establish a protocol for responding to government inquiries.
• Seek Legal Guidance: Seek legal guidance in order to reduce risks and maintain compliance in the current evolving enforcement environment.

Final Note

If you have questions or concerns about how this new IRS-DHS data-sharing agreement may affect you or your business, we encourage you to contact us for confidential consultation. We are here to help you remain compliant, informed, and protected.

[1] Unauthorized immigrants are noncitizens who generally have entered the United States without inspection, overstayed a period of lawful admission (overstays), or violated the terms of their admission. See Congressional Research Service (CRS) Report R47218, dated August 10, 2022. The population is also referred to as undocumented, or illegal immigrants. For consistency, this letter uses the term Unauthorized immigrants.

[2] See https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2020/08/Most-Serious-Problems-ITIN-Individual-Taxpayer-Identification-Number.pdf

[3] See 26 CFR § 1.871-1(a)(b) and 26 U.S. Code § 7701(b)(3).