ICE’s push for illegal immigrant data to the IRS that could end in a $97 billion revenue loss to state coffers

In a bid to step up deportations, U.S. Immigration and Customs Enforcement (ICE) wants access to the IRS’s most sensitive data – taxpayer records – to help identify and deport undocumented immigrants. But experts warn this could trigger a massive drop in tax compliance, costing states and the federal government up to $97 billion.

The near $100-billion immigrant risk

That’s how much undocumented immigrants paid in taxes in 2022, according to the Institute on Taxation and Economic Policy. Many file returns not just to follow the rules, but in hopes that proving they’ve paid taxes might one day support a bid for legal residency.

If ICE starts using IRS data to locate them, that incentive disappears. “The mere fact this is being talked about… is going to lead to declining compliance,” said ITEP’s Carl Davis.

The IRS has long resisted sharing even basic taxpayer details with law enforcement. But recent leadership changes and pressure from DHS have raised concerns that could change.

The chilling effect is already in motion. Immigrants may stop filing, switch to cash-only work, or avoid the tax system altogether – harming budgets nationwide. And with the U.S. already facing a $500 billion shortfall in tax revenue this year, further losses could strain public services even more.

This move might help ICE. But it could cripple the IRS, as well as state governments, in the process.

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