The IRS recently refused a request from ICE, the U. S. Immigration and Customs Enforcement agency, for the address of 700,000 suspected illegal immigrants that ICE is seeking to deport. The refusal was made on the basis of violating taxpayer laws. This request is being made in conjunction with the Trump administration’s commitment to deporting illegal immigrants and other immigrants that the administration wishes to remove from the U. S. Historically, the IRS has closely held this sensitive taxpayer information and “improper disclosure” has been barred under federal law.

The IRS has typically allowed illegal immigrants, or those in the country without a Social Security number or who do not qualify for a Social Security number, to apply for a 9 digit number called an ITIN (Individual Taxpayer Identification Number). With these ITINs, illegal immigrants as well as students, visitors, researchers, temporary workers and other Visa holders as well as their families have been able to file tax returns. ITINs do not convey immigrant status, nor do they allow employment. They simply allow a taxpayer the ability to be identified when filing a tax return and be in compliance from a tax perspective.

These actions of late may also have unintended consequences for taxpayers with spouses and families overseas, as it relates to the election of IRC § 6013(g), Election to Treat Non-Resident Spouse as Resident (for tax purposes only) in declaring income. As a reminder, U. S. Citizens are required to report all of their worldwide income, which may extend to the income earned with their spouse, investments overseas and most importantly, bank accounts. FBAR and FATCA have stiff penalties and fines for willful and non-willful violation of complying with their requirement.

Due to the ever changing, volatile and increasingly aggressive efforts to remove illegal immigrants and the efforts of DOGE to overturn long standing government policies and firing of government employees, all eyes are on the interaction between the IRS and ICE. With less employees at the IRS and possible dismantling of the agency, DOGE and ICE may eventually succeed in efforts to obtain information which has long been protected.

Those in the convergence of tax and immigration are acutely aware of the following:

• Immigrants, whether illegal or not, may not be as willing to apply for ITINs, which arguably identify them as willing to pay their taxes.
• Legal temporary workers and other visa holders will have less incentive to seek the path to becoming a Lawful Permanent Resident (LPR) or U. S. Citizen.
• Taxpayers who have been here, whether illegal or here on visas, may feel reluctant to file taxes or file for their spouse overseas under IRC § 6013(g), Election to Treat Non-Resident Spouse as Resident (for tax purposes only).
• A serious unintended consequence is running afoul of FBAR and FATCA requirements, whether willfully or non-willfully.
• LPRs and U. S. Citizens who have spouses and families in another may have less incentive to remain here and contribute to society
• The current and future actions of ICE may set further precedent in disrupting the balance between tax collection at the federal & state level and the admittedly needed revamping and overhaul of U. S. immigration.
  

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