IRS and Immigration: Data Sharing, Filing, and Taxpayer Rights

On February 24, 2026, a federal appeals court in Washington, D.C. ruled that the IRS can continue sharing certain taxpayer data with ICE. This unanimous decision is the latest turn in a year-long legal battle that began in April 2025. While different courts across the country have issued opposite rulings on whether this is legal, this recent decision gives the government a green light to keep the program running for now.

If you hold a green card, file taxes without a Social Security Number, work on a visa, or live abroad, this issue could intersect with your tax and immigration obligations. Here’s what the current landscape looks like.

How Has the IRS Historically Handled Taxpayer Privacy?

Section 6103 of the tax code makes tax returns and taxpayer information private. By law, the IRS cannot share this data with other agencies unless a specific exception applies, such as a court-ordered criminal investigation.

Congress toughened these privacy laws in 1976 after the Nixon administration tried to use the IRS to target political opponents. The change had broad support from both parties. Today, even the President is blocked from looking at individual IRS files.

The IRS relies on people choosing to pay their taxes. Currently, about 85% of taxpayers follow the rules voluntarily. If that rate drops by even one percentage point, the government misses out on roughly $46 billion in uncollected revenue.

By promising confidentiality, the IRS ensures that everyone (including those without legal immigration status) feels safe filing their taxes. This is a calculated strategy to maximize government revenue. A 2024 study by the Institute on Taxation and Economic Policy (ITEP) found that undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022, about $8,889 per person. More than a third of that went toward Social Security and Medicare, programs these taxpayers cannot access.

What Is the IRS-ICE Data-Sharing Agreement?

In April 2025, the Treasury and Homeland Security departments made a deal that allows ICE to ask the IRS for taxpayer data. Under this agreement, ICE can ask the IRS to confirm the names, addresses, and filing years of people who have been ordered to leave the country or are under criminal investigation.

Technically, the government is using a specific tax law (Section 6103) that allows sharing data for non-tax criminal cases. In this case, they are labeling “staying in the U.S. past a deportation deadline” as the crime that justifies the data swap.

This move was so controversial that several top IRS leaders, including the acting commissioner and the chief privacy officers, resigned. They argued that the deal likely breaks privacy laws. Early records show that while ICE checked over a million names against IRS records, the IRS only found matches and shared address info for about 47,000 people. Even then, IRS officials admitted some of that data might have been shared without following their own safety checks.

Where Does the Legal Battle Stand?

The battle over taxpayer privacy is currently a “tug-of-war” between different federal courts who have issued conflicting rulings.

• April 2025: The IRS and ICE officially signed the deal.
• August 2025: ICE sent 1.28 million names to the IRS. The IRS matched about 47,000 and shared some address data.
• November 2025: A D.C. judge blocked the IRS from sharing any more addresses. She ruled that the IRS hadn’t explained why it was suddenly abandoning decades of privacy rules.
• February 5, 2026: A Massachusetts judge issued a broader order, banning ICE from using any of the data they already received. She was concerned that the data was unreliable and could lead to the wrong people being arrested.
• February 24, 2026: An appeals court in D.C. declined to stop the data sharing. The judges suggested that the specific information being shared (names and addresses) might not actually be protected by the strict tax privacy laws the plaintiffs are citing.

The Bottom Line: Because different judges have issued opposite orders, the case is likely headed to the Supreme Court. For now, the “stop” orders from the lower courts remain the primary hurdle for the government.

Who Does the IRS-ICE Agreement Affect?

The impact depends on your immigration status, your tax classification, and where you live.

ITIN Holders (People without Social Security Numbers)

People who file taxes using an Individual Taxpayer Identification Number (ITIN), the IRS-issued ID for those who aren’t eligible for a Social Security Number, are at the center of this issue. ITINs are used by nonresident aliens with U.S. income, residents claiming dependents without SSNs, and undocumented immigrants who comply with tax law.

The concern is straightforward: filing with an ITIN could now flag a taxpayer’s information for immigration enforcement. Community organizations that provide free tax services report growing reluctance among ITIN holders to file this year.

Not filing carries its own risks. The IRS imposes failure-to-file penalties, and gaps in your tax history undermine documented compliance for future immigration applications.

Green Card Holders (Lawful Permanent Residents)

The IRS treats green card holders exactly like U.S. citizens for tax purposes: you must report worldwide income. The agreement between ICE and the IRS focuses on people with final deportation orders or under criminal investigation, so lawful permanent residents in good standing are not the stated focus.

That said, the disclosure that IRS data verification was incomplete (and that errors affected some taxpayers) raises questions about accuracy that extend beyond the undocumented population.

For green card holders, maintaining a complete tax filing history is directly tied to immigration status. U.S. Citizenship and Immigration Services (USCIS) reviews tax compliance during naturalization proceedings, and gaps or failures can create complications.

Green Card Holders Living Abroad

If you hold a green card and live outside the United States, a few additional points apply.

Your filing obligations don’t stop when you leave.

The IRS requires green card holders to file Form 1040 reporting worldwide income, regardless of where they reside. You must also file an FBAR if your foreign account balances exceed $10,000 in total at any point during the year, and meet FATCA reporting requirements if your foreign financial assets cross the applicable thresholds. These obligations continue until you formally give up your green card by filing Form I-407 with USCIS.

How you file your taxes can affect your immigration status.

Filing Form 1040-NR — the nonresident form — while you still hold a green card signals to USCIS that you may have abandoned your permanent resident status. That can jeopardize your green card, even if you didn’t intend it.

Timing matters if you’re considering giving up your green card.

Green card holders who have held their status for 8 or more of the last 15 tax years are classified as long-term residents. When long-term residents expatriate, they may face an exit tax; the IRS treats it as though you sold all your worldwide assets the day before you left. One way to avoid this is to certify five years of full tax compliance on Form 8854.

Though the IRS-ICE agreement focuses on people with final removal orders or under criminal investigation, and not lawful permanent residents maintaining their status, the broader takeaway is the same: consistent tax compliance is both a legal requirement and a practical safeguard for your immigration standing.

Visa Holders (H-1B, L-1, O-1, F-1, and Others)

Your tax obligations depend on how the IRS classifies you (nonresident alien or resident alien) based on the substantial presence test or the green card test. Your visa type alone doesn’t determine this.

Related Article: US Taxes for Foreigners: Who Has to File & How It Works

The IRS-ICE agreement does not target legal visa holders. USCIS already reviews tax records during visa renewals and status adjustments, so filing accurate, timely returns works in your favor. The data-sharing issue doesn’t change that.

Dual-Status Filers

If you switched between nonresident and resident alien status during the tax year, e.g., you arrived in the U.S. on a green card mid-year, you file as a dual-status alien. The data-sharing agreement doesn’t change what you need to file, but dual-status returns are complex enough that errors can create problems with both the IRS and USCIS.

U.S. Citizens Living Abroad

U.S. expats are not the target of this agreement. ICE focuses on immigration enforcement within the United States, and U.S. citizens aren’t subject to removal proceedings.

However, the broader principle matters to expats. The IRS-ICE agreement is the first time the IRS has formally shared taxpayer information with another agency for immigration enforcement. If you’re a U.S. citizen married to a foreign national, have family members with different immigration statuses, or manage a household where someone files with an ITIN, this development could factor into your family’s tax planning.

Does the IRS Work with Immigration?

Until April 2025, the answer was no. The IRS operated separately from immigration enforcement.

That changed in April 2025, and as of February 2026, courts in different jurisdictions have reached conflicting conclusions about whether the agreement is lawful, and litigation is ongoing.

One distinction worth noting: USCIS and ICE are separate agencies within the Department of Homeland Security. USCIS handles immigration benefits, such as visa approvals, green cards, naturalization. ICE handles immigration enforcement. The data-sharing agreement is between the IRS and ICE, not between the IRS and USCIS.

Does USCIS Have Access to IRS Data?

USCIS can review your tax transcripts, but only through a process that typically involves your consent. When you apply for a green card, renew a visa, or pursue naturalization, you may be asked to provide tax records as supporting documentation. You are voluntarily handing over that information to support your case.

That is different from the IRS-ICE agreement, where ICE requests taxpayer information without the taxpayer knowing.

Does Owing the IRS Affect Immigration Status?

Owing taxes does not automatically create immigration consequences. But USCIS does look at tax compliance during immigration proceedings. These tax-related issues can cause problems:

• Not filing returns when required, even if you owe nothing
• Carrying significant unpaid tax debt without a plan to address it
• Committing tax fraud or willful evasion, which immigration law can treat as a crime of moral turpitude
• Having gaps in your filing history during years when USCIS expects to see returns

Filing your returns, even if you owe money and need a payment plan, is generally better for your immigration record than not filing. A consistent history of compliance supports the “good moral character” determination required for naturalization.

Green card holders who have fallen behind can use the IRS’s Streamlined Filing Compliance Procedures to catch up: file three years of delinquent returns and six years of FBARs, and certify that the failure to file was non-willful. Getting into compliance before any immigration filing is generally advisable.

What Triggers IRS Red Flags?

This question comes up frequently alongside immigration and tax concerns. The most common audit triggers include:

• Income that doesn’t match what employers and institutions reported on W-2s, 1099s, and other forms
• Deductions that look too large relative to your income
• Unreported foreign financial accounts: FBAR and FATCA requirements catch many immigrants and expats off guard
• Filing the wrong form: using Form 1040 when you should file Form 1040-NR, or the other way around
• Math errors and inconsistencies on the return itself

Related Article: 8 IRS Red Flags Everyone Should Know

For immigrants and expats, the two biggest traps are forgetting to report global income and hiding foreign bank accounts. The IRS finds that people are very honest when their income is “visible,” but much less so when it’s “invisible.”

The “Visibility” Rule:

• Visible Income (Wages/Salaries): When your employer reports your pay and takes out taxes (withholding), there is a paper trail. In these cases, only 1% of income is misreported.
• Invisible Income (Self-Employment): When you work for yourself or get paid “under the table,” there is no automatic paper trail. In these cases, the “error” rate jumps to 55%.

Should You Still File Your Taxes?

Yes. For the vast majority of taxpayers, including green card holders, visa holders, dual-status filers, U.S. citizens abroad, the answer is straightforward. Your filing obligations haven’t changed, and not filing creates real problems: IRS penalties, gaps in your compliance record, and complications with future immigration applications.

The more nuanced question applies to undocumented ITIN filers, who are weighing concrete filing obligations against concerns about how their data could be used. That’s an understandable concern given the events of 2025. But even in that context, the practical case for filing is strong:

• The IRS charges a failure-to-file penalty of 5% of unpaid taxes per month, up to 25%
• Filing creates a documented record of presence and compliance that can support future immigration applications
• USCIS reviews tax history during status adjustments, and gaps raise questions
• As of this writing, multiple court injunctions limit how the IRS-ICE data sharing operates
• Not filing doesn’t make you invisible to the IRS, it just means you lose the benefits of a compliance record

Community organizations that provide free tax services are continuing to help ITIN holders file, while advising individuals to consult an immigration attorney about their specific situation. That’s sound advice. The decision is personal, but it should be informed by a professional who understands both the tax and immigration implications.

Tax and immigration rules are complicated. Your accountant shouldn’t be.

Greenback pairs you with a dedicated CPA or Enrolled Agent who specializes in exactly this. No call centers, no generalists.

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IRS & ICE: Frequently Asked Questions