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IRS reportedly nears deal to share info with ICE

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The Internal Revenue Service is reportedly getting close to an agreement to share information such as taxpayers addresses with the Department of Homeland Security’s Immigration and Customers Enforcement unit upon request.

The information sharing would be more limited than originally proposed and reportedly led to the removal of the IRS’s former chief counsel, William Paul, who had opposed the sharing of confidential taxpayer information, such as Individual Taxpayer Identification Numbers, with ICE authorities. Under the deal, as reported by the Washington Post and The New York Times, ICE would be able to submit names to the IRS which would cross-reference the data against confidential taxpayer databases. Immigration officials would be able to use the tax data to confirm the names and addresses of people who are suspected of being in the U.S. illegally. The IRS would be able to verify whether ICE officials had the correct residential address for immigrants who have been ordered to leave the U.S.

Last Wednesday, a federal district court refused to issue a temporary restraining order that would have barred the IRS from sharing such data with the immigration officials under a complaint filed by two immigrant advocacy groups. Centro de Trabajadores Unidos and Immigrant Solidarity Dupage — represented by Public Citizen Litigation Group, Alan Morrison, and Raise the Floor Alliance — filed suit against the IRS to bar it from unlawfully disclosing individual tax return information to immigration enforcement officials.

“The IRS must disclose the terms of its unprecedented information sharing agreement with ICE,” said Nandan Joshi, an attorney with Public Citizen Litigation Group and lead counsel in the case, in a statement. “Attempts by the Trump administration to gain access to the confidential taxpayer databases to engage in mass removal of workers would violate the tax law that protects the privacy of all taxpayers and undermine the protections promised to every taxpayer who files tax returns with the IRS. Attempting to gain access to personal and confidential taxpayer information crosses a line that Congress put into place after Richard Nixon used tax records to go after his enemies during Watergate. The administration’s desire to speed up their deportation agenda does not justify jettisoning decades of taxpayer protections. If this deal is being negotiated in good faith, the government should not need to keep it secret.”

However, in a separate case another federal judge blocked the Elon Musk-led U.S. DOGE Service on Monday from accessing people’s private data at the Treasury Department, the Education Department, and the Office of Personnel Management, according to the Associated Press. That case involved a coalition of labor unions, led by the United Federation of Teachers. It’s unclear how this ruling might affect the case involving access to taxpayer information such as ITINs and home addresses on file at the IRS and the Treasury.

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Accounting

Acting IRS commissioner reportedly replaced

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Gary Shapley, who was named only days ago as the acting commissioner of the Internal Revenue Service, is reportedly being replaced by Deputy Treasury Secretary Michael Faulkender amid a power struggle between Treasury Secretary Scott Bessent and Elon Musk.

The New York Times reported that Bessent was outraged that Shapley was named to head the IRS without his knowledge or approval and complained to President Trump about it. Shapley was installed as acting commissioner on Tuesday, only to be ousted on Friday. He first gained prominence as an IRS Criminal Investigation special agent and whistleblower who testified in 2023 before the House Oversight Committee that then-President Joe Biden’s son Hunter received preferential treatment during a tax-evasion investigation, and he and another special agent had been removed from the investigation after complaining to their supervisors in 2022. He was promoted last month to senior advisor to Bessent and made deputy chief of IRS Criminal Investigation. Shapley is expected to remain now as a senior official at IRS Criminal Investigation, according to the Wall Street Journal. The IRS and the Treasury Department press offices did not immediately respond to requests for comment.

Faulkender was confirmed last month as deputy secretary at the Treasury Department and formerly worked during the first Trump administration at the Treasury on the Paycheck Protection Program before leaving to teach finance at the University of Maryland.

Faulkender will be the fifth head of the IRS this year. Former IRS commissioner Danny Werfel departed in January, on Inauguration Day, after Trump announced in December he planned to name former Congressman Billy Long, R-Missouri, as the next IRS commissioner, even though Werfel’s term wasn’t scheduled to end until November 2027. The Senate has not yet scheduled a confirmation hearing for Long, amid questions from Senate Democrats about his work promoting the Employee Retention Credit and so-called “tribal tax credits.” The job of acting commissioner has since been filled by Douglas O’Donnell, who was deputy commissioner under Werfel. However, O’Donnell abruptly retired as the IRS came under pressure to lay off thousands of employees and share access to confidential taxpayer data. He was replaced by IRS chief operating officer Melanie Krause, who resigned last week after coming under similar pressure to provide taxpayer data to immigration authorities and employees of the Musk-led U.S. DOGE Service. 

Krause had planned to depart later this month under the deferred resignation program at the IRS, under which approximately 22,000 IRS employees have accepted the voluntary buyout offers. But Musk reportedly pushed to have Shapley installed on Tuesday, according to the Times, and he remained working in the commissioner’s office as recently as Friday morning. Meanwhile, plans are underway for further reductions in the IRS workforce of up to 40%, according to the Federal News Network, taking the IRS from approximately 102,000 employees at the beginning of the year to around 60,000 to 70,000 employees.

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Accounting

On the move: EY names San Antonio office MP

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Carr, Riggs & Ingram appoints CFO and chief legal officer; TSCPA hosts accounting bootcamp; and more news from across the profession.

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Accounting

Tech news: Certinia announces spring release

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Certinia announces spring release; Intuit acquires tech and experts from fintech Deserve; Paystand launches feature to navigate tariffs; and other accounting tech news and updates.

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