The Internal Revenue Service (IRS) is nearing an agreement with Immigration and Customs Enforcement (ICE) that would allow immigration officials access to legally protected taxpayer information, according to reports from the Washington Post in the last week of March. Personal tax information, including an individual’s name and address, is confidential and cannot be used to locate individuals for removal by ICE. However, under the reported deal, ICE would be able to submit names to the IRS, which would cross-reference the data against confidential taxpayer databases. 

On March 20, a U.S. District Court refused to issue a temporary restraining order that would have barred the IRS from sharing such data with immigration officials. Centro de Trabajadores Unidos and Immigrant Solidarity DuPage—represented by Public Citizen Litigation Group, Alan Morrison, and the Raise the Floor Alliance—are currently suing the IRS to prevent it from unlawfully disclosing individual tax return information to immigration enforcement officials. 

According to the March 7 complaint, the administration’s plans for cross-agency data sharing would unlawfully include sensitive tax records. “More than 13 million individuals are potentially subject to the president’s mass deportation plans,” the organizations claimed. “To carry out the deportation policies articulated by President Trump, DHS and [Immigration and Customs Enforcement] must first identify and locate individuals who are subject to removal,” they said, which is where the IRS comes in. 

“The IRS must disclose the terms of its unprecedented information-sharing agreement with ICE. Attempts by the Trump administration to gain access to confidential taxpayer databases to engage in mass removal of workers would violate the tax law that protects the privacy of all taxpayers and undermine the protections promised to every taxpayer who files tax returns with the IRS,” said Nandan Joshi, an attorney with Public Citizen Litigation Group and lead counsel in the case. 

But do undocumented immigrants pay taxes? 

According to the American Immigration Council, a non-profit, non-partisan organization, undocumented immigrants play a crucial role in the U.S. economy, not only through their labor but also through substantial tax contributions that support public services and government programs.

In 2023, households led by undocumented immigrants paid $89.8 billion in total taxes. This includes $33.9 billion in state and local taxes and $55.8 billion in federal taxes. Approximately 4.9 percent of the U.S. workforce was undocumented in 2023, with 89.4% percent of undocumented immigrants being of working age.

Additionally, the Institute on Taxation and Economic Policy (ITEP) stated in a 2024 report that more than one third of the tax dollars paid by undocumented immigrants go toward payroll taxes dedicated to funding programs that these workers are barred from accessing.

Federal, state, and local governments in the United States levy a wide array of taxes, most of which affect undocumented immigrants in some manner. Like their neighbors, undocumented immigrants pay sales and excise taxes on goods and services such as utilities, household products, and gasoline. They pay property taxes either directly on their homes or indirectly when these taxes are incorporated into their monthly rent. They also pay income and payroll taxes through automatic withholding from their paychecks or by filing income tax returns using Individual Taxpayer Identification Numbers (ITINs).

An ITIN does not authorize a person to work in the United States nor does it change their immigration status. It is a 9-digit number issued by the Internal Revenue Service (IRS) to enable individuals without Social Security Numbers (SSNs) to file and pay taxes. Although the IRS issues ITINs solely for tax purposes, they can also be used for various additional activities, including pursuing career opportunities through independent contracting, freelancing, or starting a business.

In their report, ITEP also concluded that income tax payments made by undocumented immigrants are affected by laws that require them to pay more than similarly situated U.S. citizens. Undocumented immigrants are often barred from receiving meaningful tax credits and sometimes do not claim refunds they are entitled to due to a lack of awareness, concern about their immigration status, or insufficient access to tax preparation assistance. ITEP estimated that providing access to work authorization for undocumented immigrants would increase their tax contributions, both because their wages would rise and because their rates of tax compliance would improve. Under a scenario where work authorization is granted to all current undocumented immigrants, their tax contributions would increase by $40.2 billion per year, totaling $136.9 billion. Most of the new revenue raised in this scenario—$33.1 billion—would flow to the federal government, while the remainder—$7.1 billion—would flow to states and localities.

“The Trump administration’s attempt to hijack confidential taxpayer data for immigration enforcement in the middle of tax season is not only disturbing and unprecedented; it is reckless. ITIN filers rely on the legal protection of their private information to feel safe paying into programs like Social Security, Medicare, and thousands of other essential government services that all Americans use. Without the assurance of privacy, our entire tax system will be eroded,” said Kevin Herrera, legal director of Raise the Floor Alliance. “We will not be idle while our communities are under attack. We will continue to seek judicial intervention and use every tool at our disposal to stop this administration’s campaign of prejudice and terror.”