Treasury watchdog flags flawed IRS data sharing for ICE raids

A Treasury watchdog has put fresh scrutiny on a 2025 IRS-ICE deal that broke long-standing firewalls between tax collection and immigration enforcement. The report says Immigration and Customs Enforcement asked for address data on more than 1.2 million people, but the IRS ultimately handed over last-known addresses for about 47,000.

The Treasury Inspector General for Tax Administration said the arrangement, signed in April 2025, was supposed to be limited to requests tied to criminal investigations under 8 U.S.C. § 1253(a)(1) or other specifically designated nontax federal criminal statutes. Instead, the inspector general found that the IRS’s automated matching process was flawed and could generate questionable matches, including cases where incomplete or inaccurate addresses were treated as valid.

That failure matters because the data at issue were not abstract records. They were last-known taxpayer addresses, the kind of information that can identify where families live and where employers can be reached. Privacy advocates have warned that immigrants in mixed-status households, and employers who file or retain workers’ tax information, may be less willing to comply if tax records are seen as a pipeline to deportation enforcement.

The agreement became part of Donald Trump’s broader immigration crackdown, alongside deportations, workplace raids and the use of an 18th-century wartime law against some Venezuelan migrants. It also triggered internal conflict at the IRS: acting commissioner Melanie Krause resigned in April 2025 over the deal.

The legal fallout has only widened. In February 2026, the IRS admitted it had improperly shared address data in less than five percent of the 47,000 disclosures after ICE submitted insufficient or incomplete information. A federal judge later found the IRS violated the Internal Revenue Code about 42,695 times by disclosing last-known taxpayer addresses through its TIN Matching process without confirming that ICE’s requests met the statute’s requirements.

The inspector general’s report gives the clearest official accounting yet of how far the transfer went and why it drew lawsuits and political blowback. Treasury and IRS officials did not immediately say whether they would change the procedure or defend it as a lawful enforcement tool, leaving the core question unresolved: whether tax confidentiality rules can be bent without weakening trust in the tax system itself.