WASHINGTON — The acting commissioner of the Internal Revenue Service is stepping down after the IRS signed a controversial agreement with Immigration and Customs Enforcement (ICE) to share immigrants’ tax records in support of President Donald Trump’s immigration crackdown.
Melanie Krause, who has led the agency since February, is resigning following the Monday signing of a new data-sharing agreement between Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem, the Associated Press reported.
The move allows ICE to submit names and addresses of undocumented immigrants to the IRS to cross-check against tax records, a practice critics say undermines taxpayer privacy and erodes trust in public institutions.
Two people with knowledge of Krause’s decision confirmed her resignation to the Associated Press on the condition of anonymity, as they were not authorized to speak publicly.
IRS under fire for tax-sharing deal with ICE
This marks the second leadership departure in recent months tied to IRS cooperation with immigration authorities. In February, then-acting Commissioner Douglas O’Donnell retired amid public outcry over the Department of Government Efficiency (DOGE), led by Elon Musk, gaining access to confidential IRS data. Krause was appointed to replace him.
The agreement between the Treasury and Homeland Security is framed by officials as a tool for pursuing major criminal cases involving identity fraud or illegal benefit claims. Acting ICE Director Todd Lyons said the collaboration will help agents identify people “hiding in plain sight.”
However, civil rights advocates and privacy experts are raising red flags. The Center for Democracy and Technology warned that sharing tax information with ICE could deter immigrant communities from filing taxes, which weakens public programs and places a heavier burden on all taxpayers.
“Disclosing immigrant tax records to DHS for immigration enforcement will discourage tax compliance among immigrant communities, weaken contributions to essential public programs, and increase burdens for U.S. citizens and nonimmigrant taxpayers,” said Tom Bowman, policy counsel at the center.
A possible violation of federal privacy laws
The NYU Tax Law Center also criticized the move, noting that sharing taxpayer information with DHS may violate federal privacy statutes.
“IRS officials who sign off on data sharing under these circumstances risk breaking the law,” the organization stated, warning of potential civil and criminal penalties.
In a statement, the Treasury Department defended the agreement as rooted in long-established congressional authority, claiming it protects “law-abiding Americans” while targeting criminal actors. Still, the agency did not respond to growing concern that such data-sharing practices might be weaponized for broad immigration enforcement beyond criminal investigations.
The fallout has sparked renewed debate over how far federal agencies should go in collaborating on immigration enforcement—and at what cost to privacy, public trust, and constitutional protections. The IRS, historically insulated from such actions, now finds itself at the center of a political storm with serious implications for immigrant communities across the country.
For many advocates, the concern is clear: expanding the use of sensitive tax data for deportation efforts risks discouraging compliance and participation among some of the country’s most vulnerable populations—while setting a precedent that could reach far beyond immigration.
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