The acting chief of the Internal Revenue Service is resigning from the role. This decision follows an agreement made by the Trump administration that allows the agency to share taxpayer data of undocumented immigrants with the Department of Homeland Security.

The agreement, orchestrated by Treasury Secretary Scott Bessent, permits Homeland Security Secretary Kristi Noem to access confidential IRS data for immigration enforcement purposes. The administration has filed a redacted version of the agreement in court documents. Melanie Krause, the third acting IRS commissioner under Trump, reportedly learned of the deal through news reports.

The deal allows Immigration and Customs Enforcement agents to request information about immigrants under investigation or facing removal orders. Court filings indicate that ICE agents will be able to obtain relevant information from taxpayers. Krause's departure comes after a period of instability at the tax agency. She had been in the role for just over a month, succeeding Doug O'Donnell, who retired.

O'Donnell had replaced Danny Werfel, who was appointed by Joe Biden and initially remained as IRS commissioner at the start of Trump's term. Trump later announced plans to replace Werfel with former Republican congressman Billy Long, whose nomination is awaiting Senate confirmation. Krause will remain as acting commissioner until at least May 15.

The resignation of Krause highlights concerns about the ethics and legality of the data-sharing agreement. Critics argue that the deal violates laws intended to keep taxpayer data confidential. The agreement has prompted legal challenges from advocacy groups.

Undocumented immigrants paid a significant amount in federal taxes in 2023. They contribute billions in individual income and payroll taxes, which fund services like Social Security and Medicare. Despite their contributions, undocumented immigrants are not eligible to receive these benefits. They are allowed to file tax returns using an individual taxpayer identification number.

The potential consequences of the data-sharing agreement are unclear. It could lead to a loss in federal tax revenue if undocumented immigrants become less likely to file taxes.

Additionally, there are efforts to obtain sensitive taxpayer data to cross-reference personal information with other agencies. A recent court ruling cleared the way for access to sensitive personal data at several federal agencies, including the Treasury Department. Plans are underway to develop a tool that would allow different systems to share information, potentially involving a third-party vendor.