In recent weeks, immigration agents targeting undocumented individuals through tax filing information have become a prevalent fear among Maria’s accounting clients.
Maria, a 40-year-old consultant assisting undocumented small-business entrepreneurs in Southern California, described a common refrain: “Hey, should I do my taxes this year? Because they’re going to come find me.”
Having lived in the U.S. for decades and earned multiple degrees at California universities, Maria has U.S. citizen children and has been in the process of applying for legal residency for years.
Nevertheless, like many of her clients, she lacks legal status.
Maria has routinely paid U.S. taxes in the past using an individual taxpayer identification number, or ITIN, in place of a Social Security number.
However, recent announcements from Trump administration officials regarding the sharing of IRS data with ICE agents to target undocumented taxpayers for the first time have sparked significant concern.
Despite these fears, Maria opted to pay her taxes and advised her clients to do the same, emphasizing their commitment to doing the right thing, especially since the IRS already possesses much of their information.
She expressed feelings of betrayal, saying, “They’re trying to criminalize us.
They’re trying to make it that we did it wrong, but really the government did it wrong.”
The anxiety surrounding the data-sharing plan has been rapidly spreading, especially in California, which had about 1.8 million unauthorized residents in 2022, accounting for approximately 7% of the state’s workforce and over half of all farmworkers, according to the Pew Research Center and UC Merced research.
The Trump administration maintains that the plan is a legal tool intended for use against individuals who have committed crimes, yet this assurance has done little to alleviate concerns among immigrant communities.
Rudy Espinoza, executive director of Inclusive Action for the City, an organization providing loans to undocumented entrepreneurs, remarked on the palpable fear among immigrants, which has triggered a lawsuit aimed at blocking the plan.
Espinoza stated, “We think it really is detrimental to our local economies, especially in Los Angeles, especially in California, but throughout the country.”
State leaders in Sacramento and Washington, D.C., are also voicing their opposition to the data-sharing agreement, arguing that it undermines decades of trust built with immigrant communities and could jeopardize billions in anticipated tax revenue from undocumented individuals.
According to the Institute on Taxation and Economic Policy, undocumented taxpayers in California contributed an estimated $8.5 billion in state and local taxes in 2022, more than in any other state.
Senator Alex Padilla (D-Calif.) criticized the agreement as a complete betrayal of the federal government’s longstanding commitment to not weaponize taxpayer information for political purposes, adding, “This reversal of precedent will only create more fear within our immigrant communities and make it less likely for undocumented individuals to file their taxes, which could cost billions in lost tax revenue for states and the federal government.”
Furthermore, he and other legislators have requested an investigation by the Treasury Department’s inspector general for tax administration into the legality of the deal.
Senator Adam Schiff (D-Calif.) echoed these sentiments, asserting that the data-sharing arrangement is illegal and constitutes a “total betrayal.”
He argued, “This lawless action will not make Americans any safer — and will only damage our economy.”
Schiff warned that, “fear will be spread across immigrant communities” and that “lasting damage will be done across sectors of our economy — leading to severe losses in tax revenue in the future.”
While Gov. Gavin Newsom’s office refused to comment on the potential impact on state revenue, they expressed disbelief at the Trump administration’s emphasis on undocumented taxpayers, given the administration’s repeated assertions that many immigrants are a burden on American resources.
Diana Crofts-Pelayo, a spokesperson for Newsom, remarked, “Let me get this right — the Trump administration is finally admitting that undocumented people contribute to our economy and pay taxes?”
The IRS-ICE deal was initially rumored, leading to the ongoing litigation, then publicly disclosed in court, where the federal government revealed an April 7 memorandum of understanding between Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem detailing the sharing of taxpayer data for “nontax criminal enforcement.”
In the ongoing case, the federal government maintains that the agreement complies with federal law, which generally prohibits the IRS from disclosing tax return information but allows certain exceptions.
They stated that the IRS is obligated to share information when properly requested as part of a criminal investigation and noted that specific immigration offenses, such as remaining in the country after a final removal order and reentering under certain conditions after being removed, are criminal acts.
The government asserted that the IRS-ICE deal “establishes procedures and guardrails for ensuring that such requests and subsequent transfers of information are handled lawfully and securely.”
They contended that the groups challenging the agreement “have not pointed to any evidence that information will be misused” and lack standing to bring forth such challenges.
Espinoza countered that many of the small-business owners who hold ITINs make up roughly a third of Inclusive Action’s loan portfolio, which currently has about $2.1 million in outstanding loans.
He expressed concern that if the ITIN is no longer considered a safe and credible method to pay taxes, many immigrant entrepreneurs will be reluctant to contribute to the formal economy by filing taxes.
“This fear will cause them to retreat from engaging with the economy and avoid seeking services from organizations like us,” he warned.
While many undocumented immigrants desire to demonstrate their contributions through tax payments, “the administration is throwing that all out the window,” Espinoza lamented.
He foresees widespread impacts that will reverberate across entire communities and mixed-status families, many of whom have U.S. citizen children.
Doug Smith, vice president of policy and legal strategy at Inclusive Action, emphasized that the group’s clients have been actively engaged in their communities partly due to the empowerment they felt from obtaining an ITIN, paying taxes, and believing their actions would work in their favor rather than against them.
He noted that there is now “a very strong sense of betrayal and fear,” leading to a detrimental retreat from both the economy and civic engagement.
Beyond the IRS data sharing, the Trump administration has initiated other immigration enforcement actions, compelled individuals living in the country illegally to register with the government or face imprisonment, and authorized ICE agents to target individuals in previously sensitive locations such as courthouses, schools, and churches.
State Senator Maria Elena Durazo, a Los Angeles Democrat, remarked that decades of trust between state and local governments and immigrant communities in California are at risk, prompting local officials to do everything within their power to thwart the administration’s attempts to undermine that trust.
As part of this effort, Durazo has recently introduced a bill to prevent California localities with street vendor programs from sharing vendors’ personal and tax information with federal immigration authorities unless they possess a subpoena or judicial warrant.
The proposed bill would also prohibit the collection of additional data from vendors, including fingerprints and immigration status.
Durazo concluded, “They want to pay taxes and they want to follow the rules.
But if by doing that, their information is going to be shared with ICE, then it really undermines their trust.
And we will then pay the consequences.”
image source from：https://www.latimes.com/politics/story/2025-04-12/irs-plan-to-give-data-to-ice-could-wallop-california-where-many-immigrants-pay-taxes
