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Acting Internal Revenue Service Commissioner Melanie Krause is expected to resign amid growing controversy over the IRS’s new agreement to share taxpayer data with U.S. Immigration and Customs Enforcement (ICE), a move that critics say compromises the privacy of millions and breaks with long-standing legal precedent.
Krause’s resignation follows the IRS’s quiet disclosure of a memorandum of understanding (MOU) with the Department of Homeland Security (DHS), filed in court late Monday in response to a lawsuit from watchdog group Public Citizen. The MOU outlines how ICE can access immigrants’ tax information—including names and addresses—to assist in identifying and deporting undocumented individuals.
“Melanie Krause has been leading the IRS through a time of extraordinary change,” said a Treasury spokesperson. “As we modernize our systems and work to identify fraud and abuse, we must also ensure our actions reflect the rule of law.”
Krause is departing through the agency’s Deferred Resignation Program and may officially step down as soon as April 28, according to sources familiar with the matter. She is not the only senior official leaving: Kathleen Walters, the IRS’s chief privacy officer, along with Chief Financial Officer Teresa Hunter and Chief Risk Officer Mike Wetklow, are also exiting the agency. At least one of the resignations is also linked to the ICE data-sharing agreement.
The Treasury Department argues the new arrangement is grounded in “longstanding authorities granted by Congress” and is part of a broader strategy to support President Trump’s aggressive immigration policies. The policy, however, has sparked outcry from privacy advocates, legal scholars, and former IRS officials.
“The agreement threatens to violate the rights that many more Americans have under longstanding laws that protect their tax information,” wrote tax law experts at the NYU Tax Law Center. “IRS officials who sign off on data sharing under these circumstances risk breaking the law.”
The partially redacted agreement reveals that the IRS will provide ICE with immigrants’ tax data to cross-verify individuals residing in the U.S. illegally. According to acting ICE Director Todd Lyons, the information will be used to uncover identity fraud and major criminal cases, not minor immigration violations.
“This helps us find people who are hiding in plain sight, sometimes collecting benefits they aren’t entitled to,” said Lyons, speaking at the Border Security Expo in Phoenix. He stressed the collaboration is focused on “major criminal cases.”
Still, critics question the legality and intent behind the move. “This is an attack on the integrity of the IRS as a non-political agency,” said a former senior Treasury official who asked not to be named. “It undermines trust and opens the door to massive privacy violations.”
Legal experts warn that the deal could violate Section 6103 of the Internal Revenue Code, which strictly limits how and when taxpayer information can be disclosed—even to other government agencies.
Even Treasury insiders appear divided. One anonymous official maintained that the agreement “balances privacy with law enforcement needs,” while acknowledging “strong internal disagreements” about its implementation.
With multiple high-level resignations and legal scrutiny mounting, the IRS faces a turbulent road ahead as it attempts to navigate a new era of politicized data-sharing and diminished public trust.
