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institute on taxation and economic policy
ICE-IRS Deal Blasted as 'Bad Policy. Bad Economics. And Cruel.'
"The administration is shattering what little trust remains between immigrant communities and the government and putting critical revenue streams at risk," said one critic.
Apr 08, 2025
Migrant and privacy rights advocates this week are sounding the alarm over a deal signed by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem to hand sensitive taxpayer data over to immigration authorities as part of U.S. President Donald Trump's mass deportation effort.
The Internal Revenue Service (IRS) and the Immigration and Customs Enforcement (ICE) have entered into a memorandum of understanding (MOU) "to establish a clear and secure process to support law enforcement's efforts to combat illegal immigration," a Treasury Department spokesperson toldFox News, which reported on the development after a late Monday court filing.
"The bases for this MOU are founded in long-standing authorities granted by Congress, which serve to protect the privacy of law-abiding Americans while streamlining the ability to pursue criminals," the spokesperson said. "After four years of [former President] Joe Biden flooding the nation with illegal aliens, President Trump's highest priority is to ensure the safety of the American people."
After weeks of warnings about a potential data transfer deal, it was revealed as part of a legal case brought by Centro de Trabajadores Unidos, Immigrant Solidarity DuPage, Inclusive Action for the City, and Somos Un Pueblo Unido, which are represented by Alan Morrison, Public Citizen Litigation Group, and Raise the Floor Alliance.
"Taxpayer privacy is a cornerstone of the U.S. tax system," Public Citizen co-president Lisa Gilbert said in a Tuesday statement. "This move by the IRS is an unprecedented breach of taxpayer privacy laws and confidentiality, which has been respected by both political parties for decades."
"The Trump administration's terror tactic of using immigrants' tax data against them will drive some of our most vulnerable communities further underground," she warned. "If this taxpayer information isn't safe from the prying eyes of the Trump administration's goons, then no one's taxpayer information is safe."
Juliette Kayyem, a former Department of Homeland Security official now lecturing at the Harvard Kennedy School, wrote on social media: "Bad policy. Bad economics. And cruel. They are so desperate to get their deportation numbers up that they are doing this."
Multiple members of Congress also blasted the move. Rep. Jimmy Gomez (D-Calif.) said that "the IRS should NEVER be weaponized to target immigrant families. This backdoor deal with ICE shatters decades of trust—and may be illegal."
"I will fight this with everything I've got," vowed Gomez, a member of the House Ways and Means Committee. "No one should fear that filing taxes puts their family at risk."
Congressman Joaquin Castro (D-Texas) was among the critics who emphasized that the MOU doesn't just affect migrants.
"First things first: The impact of folks not filing their taxes because they are afraid of deportation would be detrimental to our economy," he explained. "Two: Immigrants pay taxes but do not benefit from the social programs that most taxpayers do. Three: Everyone should be concerned about the privacy implications here. This sets the precedent that the federal government can arbitrarily share your personal information with law enforcement. And it's just wrong."
Rep. Juan Vargas (D-Calif.) similarly said: "For decades, undocumented immigrants have trusted the IRS when it encouraged them to file. They've paid taxes in good faith, contributing nearly $100 BILLION per year and supporting social services they can't even access. Not only is this a total betrayal, but it's also illegal. We'll fight this."
The Institute on Taxation and Economic Policy also highlighted that "turning the IRS away from its job (collecting taxes) to instead focus on mass deportation efforts will mean less tax revenue collected on top of the harm done to families and communities affected by deportations."
In response to The New York Times' reporting on the deal, American Immigration Council senior fellow Aaron Reichlin-Melnick pointed out on social media that the MOU "is, on its face, limited to criminal investigations (not deportation investigations)."
"There are many questions raised about this new [agreement], which seems to violate previous understandings of the laws requiring IRS not to share taxpayer information," he continued. "But at its heart it does not seem that the MOU permits ICE to ask for taxpayer data for deportation reasons."
"It seems primarily to be aimed at criminal investigations for willful failure to depart after the issuance of a removal order, a crime on the books which (until now) is virtually never prosecuted," Reichlin-Melnick added. "Despite the fact that this MOU is limited only to criminal law enforcement, it will likely have a chilling effect on undocumented taxpayers."
How the Trump administration actually proceeds remains to be seen. The court filing says no information has been shared between the agenices yet—but the deal comes as part of a wave of anti-immigrant policies and rhetoric from the president and his officials.
"With the Supreme Court greenlighting Trump's use of the Alien Enemies Act and the administration now gaining access to sensitive IRS data, we continue to slip into a new era of authoritarianism in America," Beatriz Lopez, co-executive director of the Immigration Hub, said a Tuesday statement "The digital and physical dragnets that Trump is building mean millions of immigrants—many of whom have followed the law and paid their taxes for decades—are now vulnerable to indiscriminate brutality and quiet erasure with little opportunity for redress."
Lopez stressed that "undocumented immigrants already contribute billions to our economy—often paying a higher effective tax rate than 55 major corporations and some of the wealthiest individuals in America. By weaponizing private taxpayer data, the administration is shattering what little trust remains between immigrant communities and the government and putting critical revenue streams at risk."
"Coupled with Trump's xenophobic tariff threats and a $350 billion demand to fund mass disappearances and deportations, this is more than an attack on immigrants—it's a calculated effort to destabilize the country and remake its image," she concluded. "Congress must reject this funding and the authoritarian playbook behind it. This is not policy. It's punishment."
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Democratic Leaders Accused of Bowing to GOP Attack on IRS Funds
"For the second straight year, President Biden and the Democrats are poised to sacrifice a significant chunk of one of their biggest accomplishments," one critic lamented.
Dec 18, 2024
Economic justice advocates are urging House Democrats to do more to defend Internal Revenue Service funding after leaders of the minority party agreed to Republican draft legislation that would continue a freeze on more than $20 billion in IRS modernization and enforcement funds in order to avert a government shutdown.
The $20.2 billion freeze is part of a continuing resolution that would guarantee funding for the federal government through March 14. Although the Inflation Reduction Act signed into law by President Joe Biden in August 2022 allocated $80 billion in supplemental funding to the IRS, Congress subsequently rescinded $21.6 billion of that and added a rider for the $20.2 billion freeze in an earlier continuing resolution.
The freeze means that the funds are neither permanently rescinded nor available for use. According to the Institute on Taxation and Economic Policy, the effective $20.2 billion funding reduction would increase the federal deficit by $46 billion "due to a drop in the agency's capacity to enforce taxes on wealthy individuals owed under existing federal law."
As Dylan Gyauch-Lewis wrote Wednesday for The American Prospect, "For the second straight year, President Biden and the Democrats are poised to sacrifice a significant chunk of one of their biggest accomplishments: funding for the IRS to go after wealthy tax cheats."
"With the latest maneuver, more than 90% of the money invested to scale up IRS auditing and oversight could be gone before it can even be used," Gyauch-Lewis added. "Yet again, Democrats seem to have been outplayed by Republican leadership."
Conversely, the infusion of IRA funding has boosted IRS recovery of unpaid taxes.
"The IRS has collected $4.7 billion in back taxes from wealthy tax cheats thanks to funding from the Inflation Reduction Act," Groundwork Collaborative executive director Lindsay Owens said in a statement Wednesday. "But since its passage, Republicans have clawed back nearly half of the enforcement budget to make it easier for the ultra-wealthy to get away with not paying their share."
Democrats helped this happen. In order to secure a 2023 debt ceiling deal with then-House Speaker Kevin McCarthy (R-Calif.), Biden agreed to multi-year spending caps in the so-called Fiscal Responsibility Act, as well as the $21.6 billion IRS funding recision. Now it is uncertain whether the outgoing Biden administration or congressional Democrats will fight to defend IRS funding or once again acquiesce to GOP cuts in order to keep the government running.
House & Senate Dems told us they were fighting to add a provision in the CR to fix the frozen funding, but it didn't make the cut. Republicans have made no secret of targeting the expanded IRS funding from the IRA - an effort very likely to continue in 2025 under a GOP trifecta.
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— Cady Stanton (@cadystanton.bsky.social) December 18, 2024 at 5:10 AM
IRS Commissioner Danny Werfel warned during a recent media call that Republicans' proposed cuts to the agency's funding would "be critically damaging to our capacity to do the work we need to do to make sure that large corporations and complex partnerships are paying what they owe."
Owens said "it's clear congressional Republicans are paving the way for the Trump administration to make it open season for tax cheats."
Such fears mounted this month after Republican President-elect Donald Trump tapped former Rep. Billy Long (R-Mo.) to head the IRS. Long sponsored multiple bills to dismantle the IRS and legislation to repeal all estate taxes, which are overwhelmingly paid by the wealthiest Americans. He has also promoted a dubious pandemic-era tax credit that the IRS has called a magnet for fraud.
"Even before the new administration takes office, we are seeing Republicans take steps to hamstring the IRS to ensure the ultra-wealthy can continue to evade their taxes," Anna Aurilio, senior director of campaigns at Economic Security Project Action, said in a statement Wednesday.
"A well-funded IRS is vital to administering a fair tax code. Slashing funding for the agency, which recently collected nearly $5 billion from wealthy tax evaders and crime rings, only hurts the efficiency and efficacy of the government," Aurilio added. "By starving the agency that helps deliver vital tax credits to the American people, Congress will make it more difficult for people to file their taxes and get the credits they qualify for—all while making it easier for the wealthiest individuals and big businesses to avoid paying their fair share."
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GOP Targets Medicaid, SNAP Benefits to 'Pay for Tax Cuts for Their Billionaire Donors'
"The GOP wants to make food and healthcare unaffordable and inaccessible for the most vulnerable people in our country," said Rep. Summer Lee. "Make no mistake on who they're serving."
Nov 18, 2024
Congressional Republicans are reportedly considering new work requirements for recipients of Medicaid and nutrition assistance as well as spending caps for the programs as potential ways to counteract the massive cost of their tax agenda, which would primarily benefit the rich and large corporations.
The Washington Postreported Monday that Republicans, who are poised to take full control of the federal government come January, "have begun preliminary discussions about making significant changes to Medicaid, food stamps, and other federal safety net programs to offset the enormous cost of extending" soon-to-expire elements of the regressive tax law that President-elect Donald Trump signed in year one of his first White House term.
The nonpartisan Congressional Budget Office estimated earlier this year that an extension of the 2017 tax cuts would add $4.6 trillion to the U.S. deficit over the next decade. Republicans have made clear that tax legislation is a top priority in the next Congress, and they're preparing to use a fast-track procedure known as reconciliation to ram a new round of tax cuts through.
According to the Post, members of Trump's transition team have discussed with GOP lawmakers and aides the possibility of adding punitive new work requirements and spending caps to Medicaid and the Supplemental Nutrition Assistance Program (SNAP). Research and real-world experience have consistently shown that work requirements do virtually nothing to boost employment while making it harder for people in need to receive aid.
"To pay for tax cuts for their billionaire donors, the GOP wants to make food and healthcare unaffordable and inaccessible for the most vulnerable people in our country," Rep. Summer Lee (D-Pa.) wrote in response to the Post's reporting. "Make no mistake on who they're serving."
"We already knew the push to cut taxes for the wealthy next year was going to be costly. Now we're learning that deep cuts to critical programs are on the agenda to help pay for them."
Following an election in which grocery costs were a leading concern of many voters, the Post reported that Republican lawmakers are "discussing stripping presidential authority to recalculate benefits" for SNAP, the nation's highly effective hunger-reducing tool that helps millions afford food each year.
"Republicans argue that if they eliminate that authority and hemmed in SNAP benefits—which increase automatically with inflation—that should count as reducing the deficit by tens of billions of dollars, according to some estimates," the Post noted.
As for Medicaid, the newspaper detailed preliminary GOP discussions to halt Biden administration efforts to help people who lost coverage due to the post-pandemic purge, adding a work requirement similar to SNAP's, and conducting more frequent eligibility checks—which could result in more people losing access to the program.
House Budget Committee Chair Rep. Jodey Arrington (R-Texas) openly made the case last week for what he called a "responsible and reasonable work requirement" for Medicaid, the Post observed.
Estimated savings from such changes come nowhere near offsetting the huge projected cost of extending Trump's 2017 tax cuts for individuals and handing additional tax breaks to big corporations. On the campaign trail, Trump proposed reducing the corporate tax rate from 21% to 15%, a change that would give the 100 largest U.S. corporations a combined tax cut of $48 billion a year.
Trump's tax agenda would also disproportionately benefit the wealthiest individuals in the U.S. The Institute on Taxation and Economic Policy (ITEP) released an analysis last month showing that the tax proposals Trump floated during his bid for a second White House term would deliver annual tax cuts to the top 5% and tax hikes for the bottom 95%.
"We already knew the push to cut taxes for the wealthy next year was going to be costly," ITEP wrote on social media Monday. "Now we're learning that deep cuts to critical programs are on the agenda to help pay for them."
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