Like millions of American citizens and immigrants, Ivan filed his taxes last year. But Ivan, 54, a Massachusetts resident who hails from Colombia, is worried a recent agreement between the IRS and Immigration and Customs Enforcement means he is in danger of being deported for doing what he believed was the right thing.
And if taxpayers like Ivan decide not to file taxes because the IRS has said it will share certain tax information filed by undocumented immigrants with ICE, it could cumulatively eliminate billions in tax revenue and create “a massive problem” for citizens and immigrants alike, experts said.
Undocumented immigrants paid $96.7 billion in federal, state and local taxes in 2022, according to the Institute on Taxation and Economic Policy, a nonprofit, nonpartisan tax policy organization. About $59.4 billion of that went to the federal government and $37.3 billion to state and local governments, according to the group’s analysis. It found that even a 10% decrease in the number of undocumented immigrants filing their taxes would mean a decrease of $9.5 billion a year in tax revenue.
“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,” said Tom Bowman, a policy counsel with the Center for Democracy and Technology’s security and surveillance project.
The agreement between the IRS and ICE is a break with the longtime precedent of the federal government’s telling people that tax information would not be used against undocumented people to seek their deportation. Lawyers, advocates and other immigrants have also spread the same message — only to have that sense of safety come crashing down for undocumented immigrants like Ivan under the new Trump administration policy.
“It’s like a broken promise. It’s like a betrayal,” Ivan said in Spanish. He asked that his full name not be used out of fear of deportation.
Assistant DHS Secretary Tricia McLaughlin said in a statement that President Donald Trump is doing what should have been done all along, sharing information across the government “to solve problems.”
McLaughlin has previously said, “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.”
Undocumented immigrants and people without Social Security numbers can pay their taxes with the Individual Taxpayer Identification Number, which the IRS created in 1996.
To seek a person’s tax information, ICE needs to include certain data in its request to the IRS, including the person’s name and address, the alleged offense the person is being investigated for and the reasons disclosing the tax information is relevant to the criminal proceeding or investigation, according to a court filing.
Tax and immigration experts said the change could both erode the public’s trust of the government and lead to a decrease in tax compliance.
“This is not just an attack on undocumented immigrants. It’s an attack on all people who call this country home,” said Murad Awawdeh, the president and CEO of the New York Immigration Coalition.
ICE did not immediately respond to request for comment about the policy. Neither did the Treasury Department, which the IRS is part of.
The Institute on Taxation and Economic Policy estimated what would happen if more undocumented immigrants did not pay their taxes. It found that for every 10-percentage-point drop, tax revenues would decrease by $9.5 billion annually, with $8.6 billion of that coming from federal funds and an additional $900 million from state and local tax revenue.
“That’s going to have trickle-down effects that are going to place increased financial burdens on citizens across the country,” Bowman said, adding that it would decrease the revenue available to go to major federal programs such as Social Security and Medicare, which undocumented immigrants are not even eligible for.
“The implications are just massive,” he said.
On an individual level, “it feels like being stabbed in the back,” said a 30-year-old Brazilian asylum-seeker who asked that his name not be used for fear of being deported. He added that he has filed taxes for years. “Most of us want to file taxes and comply with the law. Now we’re at risk with our lives on the line.”
He said he did not know whether he would pay taxes this year. Ivan also said he is undecided because he fears being deported.
“It’s a constant terror for immigrants,” he said. “They’re not only taking criminals. They want to take everyone, people who are working and contributing to this country.”
There have been stringent taxpayer privacy laws after former President Richard Nixon sought to use IRS information to go after his political opponents.
“Its origin was to prevent the weaponized use of tax data against political opponents and perceived enemies,” Bowman said.
Angela Divaris, an attorney with Greater Boston Legal Services, which provides free legal services, said people who prepare taxes for large immigrant communities nationwide reported both fewer first-time tax filers and returning filers so far this year.
Divaris said attorneys have also been reaching out for guidance about how to educate immigrants about paying their taxes and explaining the new potential risks associated with doing so.
Attorneys and advocates who have counseled undocumented immigrants are also feeling an “enormous feeling of guilt and concern,” Bowman said.
“For decades, lawyers and civil society organizations have been telling undocumented immigrants to file your taxes to demonstrate financial responsibility for use in immigration proceedings and to assimilate into life in the United States,” he said. “Now there’s a question as to whether that’s good advice.”