The Trump administration has moved to dismiss a lawsuit challenging an agreement that allows the Internal Revenue Service (IRS) to share certain taxpayer information with immigration enforcement authorities, escalating tensions over privacy protections for undocumented immigrants who pay U.S. taxes.
The lawsuit was filed earlier this year by immigrant rights groups and labor organizations after the Department of Homeland Security and the IRS reached a data-sharing arrangement that critics argue could expose undocumented taxpayers to deportation risks.
The administration argued in court filings that the agreement complies with federal law and is designed to support criminal investigations involving immigration enforcement and tax-related offenses.
The case centers largely around the use of Individual Taxpayer Identification Numbers, or ITINs, which allow individuals without Social Security Numbers, including many undocumented immigrants, to file tax returns and pay federal taxes.
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Advocates challenging the policy say the agreement undermines longstanding trust between immigrant communities and the IRS.
“This policy threatens to weaponize confidential tax information against working families,” several advocacy groups argued in legal filings cited by CNBC. Critics warn the move could discourage tax compliance among undocumented workers who collectively contribute billions of dollars annually in federal, state, and payroll taxes.
Supporters of the administration’s position argue federal agencies should be permitted to coordinate more closely on immigration enforcement and fraud investigations, particularly in cases involving identity theft, false documentation, or criminal activity.
The dispute reflects broader immigration policy shifts under President Donald Trump’s second administration, which has prioritized stricter border enforcement, expanded deportation operations, and increased interagency cooperation.
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Immigrant advocacy organizations say the case could have major implications for privacy protections involving sensitive taxpayer records and government data-sharing authority.
Legal experts note that federal tax confidentiality laws have historically imposed strict limits on how taxpayer information may be shared outside the IRS, though exceptions exist for certain criminal investigations and national security matters.
The administration’s motion to dismiss does not resolve the underlying legal dispute, and the federal court overseeing the case must still determine whether the lawsuit can proceed.
The controversy also arrives amid heightened political debate over immigration enforcement, labor markets, and the economic role of undocumented workers across industries including agriculture, hospitality, construction, and food services.
Industry groups and immigration advocates warn that weakening confidence in taxpayer confidentiality could create broader economic consequences if large numbers of undocumented workers avoid filing taxes altogether.