The Internal Revenue Service (IRS) is facing a storm of criticism and legal action after it was revealed that the agency improperly disclosed the confidential tax information of thousands of individuals to the Department of Homeland Security (DHS), as part of an immigration enforcement initiative launched under the Trump administration. The disclosure, which appears to breach long-standing legal firewalls protecting taxpayer data, has triggered resignations among top IRS officials, court orders halting the data-sharing, and a fierce debate over privacy, trust, and the reach of federal agencies.
According to The Washington Post, the situation centers on a memorandum of understanding signed in April 2025 between the Treasury Department and DHS. The agreement, authorized by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem, allowed U.S. Immigration and Customs Enforcement (ICE) to submit lists of names and addresses of people suspected to be living in the United States without legal status. The IRS was tasked with cross-referencing these names against its tax records to aid immigration enforcement.
For years, immigrants—regardless of their legal status—have been encouraged to pay taxes, with the federal government assuring them that their personal information would remain confidential. This assurance was a cornerstone of IRS policy, designed to foster trust and compliance. But as Newsweek reports, the new agreement marked a sharp departure from tradition: “This privacy failure is a stark reminder of why safeguards for sensitive data are so critical,” said Tom Bowman, policy counsel for the Center for Democracy & Technology. “The improper sharing of taxpayer data is unsafe, unlawful, and subject to serious criminal penalties.”
The scale of the data request was staggering. In a declaration filed on February 12, 2026, IRS Chief Risk and Control Officer Dottie Romo stated that ICE submitted requests for the names and addresses of 1.28 million individuals. Of these, the IRS was able to verify roughly 47,000 names, and for about 5 percent of those, the agency provided additional address information—potentially in violation of federal confidentiality protections for tax records. Romo explained that in some cases, the IRS shared addresses even when the information provided by ICE was incomplete or insufficient to positively identify individuals.
The error was only discovered recently, and the fallout has been swift. The Treasury Department notified DHS of the improper disclosure in January 2026 and requested help to “promptly take steps to remediate the matter consistent with federal law,” including the appropriate disposal of any data ICE received in error. The IRS is now working with other federal agencies to contain the breach and prevent further unauthorized disclosures.
Advocacy groups and privacy experts have sounded the alarm about the potential consequences. “Once taxpayer data is opened to immigration enforcement, mistakes are inevitable and the consequences fall on innocent people,” Bowman told the Associated Press. “The disclosure of thousands of confidential records unfortunately shows precisely why strict legal firewalls exist and have—until now—been treated as an important guardrail.” Lisa Gilbert, co-president of Public Citizen, echoed these concerns, telling the Associated Press, “This breach of confidential information was part of the reason we filed our lawsuit in the first place. Sharing this private taxpayer data creates chaos and, as we’ve seen this past year, if federal agents use this private information to track down individuals, it can endanger lives.”
The legal response has been decisive. Shortly after the agreement was signed, a lawsuit was filed against Treasury Secretary Bessent and Homeland Security Secretary Noem on behalf of several immigrant rights organizations. In November 2025, a federal judge blocked the IRS from sharing information with DHS, ruling that the IRS had illegally disseminated the tax data of some migrants, violating taxpayer confidentiality laws. Just last week, another judge ordered the IRS to stop disclosing residential addresses to ICE, marking the second court ruling against the IRS-DHS agreement, according to Fox News. These court decisions have effectively halted the controversial data-sharing program, at least for now.
The controversy has also upended leadership at the IRS. Acting IRS Commissioner Melanie Krause, who was appointed by President Trump in early 2025, resigned in protest after the agreement was signed, citing likely violations of taxpayer privacy law. Other top officials, including chief privacy officer Kathleen Walters and chief privacy officer Teresa Hunter, also stepped down over similar concerns. The National Immigration Forum, a prominent advocacy group, described the agreement as “a drastic shift away from the IRS’s longstanding commitment to taxpayer privacy,” warning that taxpayer information should only be shared with law enforcement in very specific and narrow circumstances to support criminal investigations.
For the people whose information was disclosed, the risks are far from theoretical. As Bowman noted in his statement to Newsweek, “Treating these privacy violations as a bureaucratic hiccup ignores the reality that these errors can lead to detention, family separation, identity theft, and lasting harm to people who followed the law by filing their taxes.” The ICE data files reportedly included sensitive fields such as first and last name, Social Security number, date of final removal order, and addresses—details that could easily be misused if they fall into the wrong hands.
From the government’s perspective, the rationale for increased information sharing is rooted in national security and public safety. A DHS spokesperson told The Hill that “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, and identify what public benefits these aliens are using at taxpayer expense.” Supporters of the agreement argue that the ability to cross-reference tax data with immigration records is a powerful tool for enforcing the law and protecting the American public.
But critics counter that such measures erode the trust that underpins the tax system and threaten the privacy of all taxpayers, not just those targeted by immigration enforcement. Federal law imposes strict confidentiality requirements on tax information, and unauthorized disclosures can trigger both civil and criminal penalties. The IRS has not said whether it will notify individuals whose data was shared, leaving many in the dark about whether their privacy was compromised.
As the IRS and DHS scramble to contain the fallout, the episode stands as a cautionary tale about the dangers of blurring the lines between tax administration and immigration enforcement. The breach has not only exposed thousands of people to potential harm, but also shaken the foundations of trust in one of the country’s most critical institutions. The road ahead will likely be shaped by ongoing litigation, policy debates, and the efforts of privacy advocates determined to restore the guardrails that, until now, have protected taxpayer data from misuse.
For now, the IRS is left to reckon with the consequences of a decision that, in the words of one advocate, “eviscerates trust” and leaves innocent people to bear the cost of bureaucratic overreach.