IRS acting commissioner resigning over Treasury’s plan to share immigrant tax data with ICE

The acting commissioner of the Internal Revenue Service is expected to resign after the agency disclosed that it has agreed to share immigrants’ tax data with Immigration and Customs Enforcement to help identify and deport undocumented immigrants.

According to a source familiar with the situation and a statement from the Treasury Department, Melanie Krause is leaving the agency due to disagreement over the Treasury Department’s decision to share IRS taxpayer data with the Department of Homeland Security. 

“Melanie Krause has been leading the IRS through a time of extraordinary change. As we focus on IT modernization and re-organize the agency to better serve the taxpayer, we are also in the midst of breaking down data silos that for too long have stood in the way of identifying waste, fraud, and abuse and bringing criminals to justice,” a Treasury spokesperson said in a statement.

Krause is planning to resign after opting into the agency’s recently offered Deferred Resignation Program, the source told CBS News on Tuesday. The Washington Post was the first to report on her resignation.

Late Monday, the IRS disclosed its memorandum of understanding with the Department of Homeland Security in a court filing in a lawsuit filed by Public Citizen, which seeks to bar the Treasury Department from disclosing tax return information to immigration enforcement authorities.

According to the exhibit, the IRS will review all requests and account for disclosures made under the memorandum. While some of the memo is highly redacted, it reveals that the IRS will disclose to ICE the names and addresses of immigrants, among other information.  

The new data-sharing arrangement will allow ICE to cross-verify the names and addresses of immigrants inside the U.S. illegally with their IRS tax records.

Treasury argues that the agreement will help carry out President Trump’s agenda to secure U.S. borders and is part of his larger nationwide immigration crackdown, which has resulted in deportations, workplace raids, and the use of the Alien Enemies Act to deport Venezuelan migrants.

Advocates say the IRS-DHS information sharing agreement violates longstanding privacy laws and diminishes the privacy of all Americans.

A Treasury official who spoke on the condition of anonymity to explain the agency’s thinking on the agreement said the basis for the agreement is founded in “longstanding authorities granted by Congress, which serve to protect the privacy of law-abiding Americans while streamlining the ability to pursue criminals.”

Todd Lyons, acting ICE director, told reporters at the Border Security Expo in Phoenix on Tuesday that the agreement would help ICE find people who are collecting benefits they aren’t entitled to and are “kind of hiding in plain sight” using someone else’s identity.

Working with Treasury and other departments is “strictly for the major criminal cases,” Lyons said.

The IRS has already been called upon once to help with immigration enforcement earlier this year.

Noem in February sent a request to Bessent to borrow IRS Criminal Investigation workers to help with the immigration crackdown, according to a letter obtained by The Associated Press. It cites the IRS’ boost in funding, though the $80 billion infusion of funds the federal tax collection agency received under the Democrats’ Inflation Reduction Act has already been clawed back.

Tax law experts for the NYU Tax Law Center wrote Monday that the agreement “threatens to violate the rights that many more Americans have under longstanding laws that protect their tax information from wrongful disclosure or dissemination.”

“In fact, it is difficult to see how the IRS could release information to DHS while complying with taxpayer privacy statutes,” they said, “IRS officials who sign off on data sharing under these circumstances risk breaking the law, which could result in criminal and civil sanctions.”

The memo states that the IRS and ICE “will perform their duties in a manner that recognizes and enhances individuals’ right of privacy and will ensure their activities are consistent with laws, regulations, and good administrative practices.”

Aaron Navarro and

Nicole Sganga

contributed to this report.