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WASHINGTON — The acting commissioner of the IRS is resigning over a deal to share immigrants’ tax data with Immigration and Customs Enforcement for the purpose of identifying and deporting people illegally in the U.S., according to two people familiar with the decision.
Melanie Krause, who had served as acting head since February, will step down over the new data-sharing document signed Monday by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem. The agreement will allow ICE to submit names and addresses of immigrants inside the U.S. illegally to the IRS for cross-verification against tax records.
Two people familiar with the situation confirmed Krause was resigning and spoke to The Associated Press on condition of anonymity because they were not authorized to discuss it publicly.
The IRS has been in upheaval over Trump administration decisions to share taxpayer data. Acting Commissioner Douglas O’Donnell announced his retirement from the agency after roughly 40 years of service in February as furor spread over Elon Musk’s Department of Government Efficiency gaining access to IRS taxpayer data. Krause replaced him.
Acting chief counsel William Paul was removed from his role at the agency last month and replaced by Andrew De Mello, an attorney in the chief counsel’s office who is deemed supportive of DOGE, according to two other people familiar with the plans who were also not authorized to speak publicly.
The Treasury Department says the agreement will help carry out President Donald 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 an 18th century wartime law to deport Venezuelan migrants.
Advocates, however, say the IRS-DHS information-sharing agreement violates privacy laws and diminishes the privacy of all Americans.
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,” said a Treasury official who spoke on the condition of anonymity to explain the agency’s thinking on the agreement.
Tom Bowman, policy counsel for the Center for Democracy and Technology, said disclosing immigrant tax records to DHS for immigration enforcement “will discourage tax compliance among immigrant communities, weaken contributions to essential public programs, and increase burdens for U.S. citizens and nonimmigrant taxpayers. It also sets a dangerous precedent for data privacy abuse in other federal programs.”
Todd Lyons, acting ICE director, told reporters at the Border Security Expo in Phoenix on Tuesday that the agreement will 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 had already been called upon 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 AP. 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.
A collection of tax law experts for the NYU Tax Law Center wrote Monday that the IRS-DHS 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.”
