New IRS-DHS Memorandum allows IRS to share taxpayer information with DHS for purposes of investigating "nontax Federal criminal statutes."

On April 7, 2025, the Internal Revenue Service (IRS) and the Department of Homeland Security (DHS) signed a Memorandum of Understanding (MOU) which allows the IRS to share taxpayer information with the DHS. The purpose? Ostensibly to help DHS locate individuals within the United States who have final removal orders or are otherwise illegally present in the U.S. But the full extent of the MOU will allow DHS to request (and the IRS to give DHS) tax information for investigations into any number of "nontax federal criminal statutes."

Understanding the Memorandum Between the IRS and DHS

This newly established MOU allows for the sharing of specific taxpayer information between the IRS and the DHS, marking a previously unseen level of cooperation between these agencies. The agreement aims to enhance DHS's capabilities in battling various crimes, including immigration violations and serious offenses unrelated to taxes.

Implications for Taxpayers

With the introduction of this MOU, many taxpayers might feel uneasy about the security of their financial privacy. A primary concern is whether personal information shared during tax filing could potentially be used against them in a federal investigation by the DHS.

The term "nontax federal criminal statutes" covers a wide range of offenses—from immigration violations to drug crimes. For example, while the IRS might prioritize tax fraud cases, the data shared with DHS could also be used in other investigations if even minor infractions are detected. As a result, numerous taxpayers may feel a heightened anxiety regarding their financial disclosures.

How This Affects Data Privacy Laws

The implications of the MOU extend beyond individual taxpayer concerns. It raises substantial questions about existing data privacy laws. By facilitating this collaboration, the IRS and DHS might pave the way for similar agreements, complicating future privacy protections.

Moving Forward: Staying Informed is Key

The new MOU between the IRS and DHS marks a transformative moment in the relationship between tax authorities and law enforcement. While facilitating law enforcement's capability to combat crime might seem beneficial, the broader implications for privacy and taxpayer rights are concerning. The best thing we can all do is to stay informed about how DHS will use this new MOU.