IRS–ICE Data Sharing MOU: What Employers Need to Know

On April 7, 2025, the Internal Revenue Service (IRS) and U.S. Immigration and Customs Enforcement (ICE) entered into a Memorandum of Understanding (MOU) authorizing ICE to request and receive limited taxpayer identity information for immigration-related criminal investigations — without first obtaining a court order.

This arrangement marks a significant shift in inter-agency cooperation and raises serious privacy, compliance, and enforcement concerns for employers.

What the IRS–ICE MOU Does

The new MOU enables ICE to access a taxpayer’s last known address from IRS records when investigating certain immigration crimes. Most notably, it references 8 U.S.C. § 1253(a)(1) — a statute criminalizing willful failure to depart the U.S. within 90 days after a final removal order.

Prior to this agreement, ICE relied on databases such as the National Crime Information Center, state DMV records, or local law enforcement data-sharing partnerships to locate individuals.

The MOU streamlines that process, creating a formal channel for ICE to cross-check targets’ identifying information directly against IRS files.

Legal Basis for the Information Sharing

Section 6103 of the Internal Revenue Code generally protects the confidentiality of taxpayer data. However, it contains narrow exceptions permitting disclosure when the information is “necessary for a criminal investigation or proceeding.” The IRS–ICE MOU invokes this exception.

Under the MOU, ICE must submit a written request to the IRS identifying:

• The individual under investigation
• The relevant tax years
• The criminal statute being investigated (such as § 1253(a)(1))
• The date and case number of the final removal order
• A statement explaining why the address information is relevant
• An attestation that the data will be used solely for authorized criminal enforcement

Once submitted, the IRS reviews each request for completeness and validity before releasing the information. Importantly, only identity and address information may be shared — not full tax returns, financial details, or employer data.

Limitations and Safeguards

The MOU expressly prohibits ICE from using taxpayer data for civil immigration actions or general enforcement. The information may only be used for:

• Preparation for judicial or administrative proceedings,
• Pending investigations that may result in criminal proceedings, or
• The proceedings themselves.

ICE must also comply with IRS Publication 1075, which sets federal standards for safeguarding sensitive taxpayer information. Violations of these safeguards could expose ICE to administrative penalties and legal challenges.

Legal Challenges and Public Criticism

The MOU has faced swift opposition from privacy advocates, immigrant rights organizations, and members of Congress. In Centro de Trabajadores Unidos v. Bessent (No. 1:25-cv-00677, D.D.C.), advocacy groups sought to block the MOU, arguing it would be misused for civil deportations.

The District Court for D.C. denied a preliminary injunction, ruling that the MOU’s text confines disclosures to criminal matters consistent with § 6103(i)(2).

The case is now before the D.C. Circuit Court of Appeals (No. 25-5181), which held oral arguments in early October 2025.

In an amicus brief, 93 members of Congress argued that the MOU undermines taxpayer trust, discourages voluntary compliance, and erodes the firewall between tax administration and immigration enforcement.

The court’s decision, expected later this year, could redefine the boundaries of inter-agency data sharing.

Implications for Employers

Although the MOU applies to individual taxpayer data — not employer records — its broader implications are clear. It signals a policy shift toward more aggressive immigration enforcement, including potential criminal investigations involving employers who may be accused of harboring or employing unauthorized workers.

The One Big Beautiful Bill Act, passed earlier in 2025, allocated $170 billion to immigration enforcement, with over $75 billion directed to ICE.

This funding surge expands ICE’s operational capacity beyond the MOU’s data-sharing framework to include site inspections, audits, and worksite enforcement initiatives.

While the MOU theoretically allows ICE to focus on individuals rather than workplaces, in practice, large-scale employer raids remain more efficient.

ICE’s ability to cross-reference IRS data for address verification enhances its targeting capabilities — potentially increasing risks for both employees and employers connected to enforcement actions.

What Employers Should Do Now

Employers should assume that immigration enforcement will continue to intensify and that ICE will increasingly use data-driven methods to identify potential violations. Proactive compliance is essential. Key steps include:

1. Review hiring and verification practices — Ensure Form I-9 procedures are current and consistent with federal requirements.
2. Audit internal records — Verify that Social Security numbers, payroll data, and tax withholdings align across HR and payroll systems.
3. Prepare an enforcement response plan — Establish protocols for handling ICE visits, subpoenas, and information requests.
4. Train HR and management — Ensure all staff understand proper procedures during audits or inspections.
5. Monitor legal developments — Follow the pending D.C. Circuit appeal and related policy updates from the IRS and DHS.

The IRS–ICE MOU represents a major step toward inter-agency collaboration that blurs traditional boundaries between tax enforcement and immigration control.

While the agreement is currently limited to identity data for criminal investigations, it could serve as a precedent for broader data-sharing initiatives across federal agencies.

For employers, the message is clear: expect tighter enforcement and greater scrutiny. By strengthening compliance programs now and monitoring the outcome of ongoing litigation, employers can better navigate the evolving landscape of immigration and tax enforcement.

FAQs