In the Black: May 2025
Why Budget Hawks should be furious at the IRS helping ICE
IRS+ICE= The Math isn’t Mathing.
In early April, as we were head down finishing the tax marathon, the IRS agreed to share information with the Department of Homeland Security and, by default, ICE. If you think that sounds hinky, so did the acting commissioner, Melanie Krause, who resigned in protest.
How exactly will that work? Well, parts of the agreement are redacted, so it’s tricky to know. The terms say ICE will come to the IRS with the names and addresses of taxpayers that they believe have violated federal immigration laws (including overstaying a visa).
For years, the IRS and tax professionals (including yours truly) have encouraged immigrants to file taxes. We were confident that the data was secure and knew that tax documents were often useful in immigration court as a marker of being in good standing. The IRS has allowed undocumented immigrants and folks ineligible for Social Security numbers to file taxes using an ITIN or Individual Taxpayer Identification Number since the mid-nineties!
The Math isn’t Mathing. Undocumented immigrants pay about $100 billion annually in federal, state, and local taxes, according to an estimate released last year by the liberal Institute on Taxation and Economic Policy. That money comes in through payroll withholdings and filed income tax returns. It should be noted here that even as undocumented immigrants pay into the Social Security and Medicare system, they are unable to receive any benefits. The benefits they fund through tax dollars go to American citizens.
The Budget Lab, a nonpartisan research center at Yale University, estimates that the federal government could see a $300 billion revenue drop over the next decade because of this policy. If you read my newsletter last month, you know the current administration is desperately trying to find the money to pay for their corporate tax cuts. Pretty strange move for an administration facing a budget crisis.
One more reason to be mad.
Regular readers will remember that DOGE is gutting the staff at the IRS, definitely by 20%, perhaps 50% of their workforce. So the chances of them answering your call or our letters just got even slimmer now that the remaining staff have to play footsie with ICE.
Liz & The Team