Organizations file lawsuit to stop IRS from sharing taxpayer data with ICE

Inclusive Action for the City (IAC), an economic justice organization based in Los Angeles, has joined a lawsuit with the Public Citizen Litigation Group to prevent the Internal Revenue Service (IRS) from disclosing taxpayer information to U.S. Immigration and Customs Enforcement (ICE) for mass deportations.

While both agencies are close to finalizing the deal, the agreement would enable ICE to submit the names and addresses of undocumented immigrants to the IRS for cross-checking with tax records, potentially exposing confidential information to Homeland Security Secretary Kristi Noem and acting ICE Director Todd Lyons, who would be the only two people authorized to submit requests if the deal were to go through. The deal comes as President Donald Trump aims to accelerate the process of mass deportations, which was part of his campaign promises.

Public Citizen Attorney Nandan Joshi, who leads the case, said the law does not permit the IRS to disclose tax records to make it easier for immigration authorities to locate workers for deportation.

Rudy Espinoza, chief executive officer at IAC, told CALÓ News that they are taking a stand to protect the rights of their clients, many of whom are local street vendors and business owners who entrust their data with the IRS and use Individual Tax Identification Numbers (ITIN) to pay their taxes every year. The filing process has been used by undocumented Americans since the 1990s but it has also been used to target people for immigration enforcement and possible removal. 

 “We cannot sit idly by as the federal government weaponizes tools of economic inclusion and uses them to exclude and harm taxpayers who contribute so much to our communities. While the administration seeks to upend our financial systems and destroy lives, we will fight with urgency to ensure immigrant workers and small business owners in L.A. and across America can continue to safely participate in the economy,” said Espinoza.

He also added that when an ITIN holder pays their taxes, registers for a business permit or goes through the formal process of building their business, they participate in the growth of the economy. According to the Institute on Taxation and Economic Policy, in 2022 undocumented immigrants paid $96.7 billion in federal, state and local taxes. If we break it down, it leads to $8,889 per person. For every 1 million undocumented immigrants who reside in the country, they receive $8.9 billion in additional tax revenue.

IAC works with undocumented immigrant entrepreneurs every day, whether it is expanding access to capital through small business loan programs or state policy advocacy to expand economic inclusion. Espinoza stated that compromising data security for workers using ITINs could result in significant job and business losses.

“There are going to be taxpayers that are going to be afraid to participate and contribute to the economy because they're going to be worried that their data is going to be shared with the authorities that seek to hand them over to law enforcement,” Espinoza said. “We believe that if this happens, not only can it hurt financially but also socially. We worry that it's going to rip families apart and that some taxpayers are going to be targeted by immigration authorities.

“The court must intervene now before irreversible harm is done,” said Sophia Zaman, executive director of Raise the Floor Alliance, who is also partaking in the lawsuit. “This isn’t just bureaucratic overreach—it’s part of Trump’s broader power grab, designed to destabilize immigrant communities, wreck the economy and further entrench workers into unstable conditions. Low-wage workers who file taxes using Individual Taxpayer Identification Numbers will be among the hardest hit. Without taxpayer privacy, our federal government could lose out on billions of revenue dollars needed to fund essential services that are already being pulled away.”