The Trump administration continued its crackdown against illegal immigration this week when the Internal Revenue Service (IRS) signed a memorandum on Monday agreeing to share immigrants’ tax data with federal immigration authorities.

The effects of such an agreement — which led to the acting IRS commissioner’s resignation —  could be especially hard hitting in Nevada, which has the largest per capita undocumented population of any state and the nation’s largest share of mixed-status families. 

Immigration advocates and legal professionals say the new agreement could stoke fears in the immigrant community and ultimately lead to decreased federal tax revenue.

“We're already seeing a chilling effect in tax compliance,” said UNLV Boyd School of Law professor Francine Lipman. “If this is a permanent chilling, it will have devastating effects for the federal government, and what ends up happening is we all bear the cost of that.” 

Lipman says that the IRS-ICE agreement could further discourage compliance, as immigrants already face significant barriers such as low wages, employment restrictions and fear that filing a tax return could expose them to deportation.

The IRS allows undocumented immigrants and others not eligible for a Social Security number to apply for an Individual Taxpayer Identification Number, which allows them to file tax returns but does not convey legal status. For decades, the IRS encouraged undocumented people to file taxes, promising that their information would be kept confidential.

Under the new agreement, Immigration and Customs Enforcement (ICE) officials can request information from the IRS about individuals who have final orders of removal or are under criminal investigation — including for failing to leave the country after 90 days. It will also allow ICE to submit the names and addresses of unauthorized immigrants to the IRS to cross-verify them against tax records.

With no state income tax, the majority of undocumented Nevadans’ tax payments came from property or sales tax. Determining the tax contributions of undocumented immigrants is inherently difficult given that much of the population lacks legal documentation, but it's generally estimated that their tax compliance rates are lower than legal residents, hovering between 50 percent to 75 percent. 

Lipman said that the language of the memorandum violates long-standing privacy laws that protect the IRS from political interference.

“It is antithetical to the way our tax system has functioned,” she said. “It undermines people's trust in the federal government.”

Although undocumented immigrants are not eligible for programs such as Social Security or Medicaid, the amount Nevada’s undocumented population contributes in taxes is huge — more than $500 million in 2022 — according to a 2024 study from the left-leaning Institute on Taxation and Economic Policy. 

Legal professionals have also questioned the broad language of the agreement. Martha Menendez, an immigration attorney with the Nevada Immigrant Coalition, said the term “under criminal investigation” could imply that immigrants who file taxes may have their data accessed by ICE over a relatively minor infraction, such as having multiple traffic tickets, or even if they are found innocent of a charge. 

“I think that it is by design. It allows the administration or the officials in charge to basically define who is a criminal,” Menendez said.

Treasury Secretary Scott Bessent has said that the agreement will facilitate President Donald Trump’s agenda to secure the border, and earlier this year, Department of Homeland Security Secretary Kristi Noem called upon the IRS to help with immigration enforcement.

An anonymous Treasury official told The Associated Press that the basis for the agreement is founded in “long-standing authorities granted by Congress, which serve to protect the privacy of law-abiding Americans while streamlining the ability to pursue criminals.” 

Immigration advocates say it could significantly discourage legal residents from filing, especially those in mixed-status households. It’s estimated in Nevada that there are nearly 136,000 U.S. citizens with at least one family member who is undocumented.

U.S. citizens have already been denied credit because of the legal status of their spouse or parents, such as in 2017 when Trump added a Social Security number requirement for the child tax credit, barring many immigrant families from getting the tax break for their children.

“You'll have one spouse who's a U.S. citizen, the other spouse is presently unauthorized, and they might have U.S. citizen children,” Lipman said. “It certainly is chilling these families from filing too, because they're worried about their spouse or their children.” 

Lipman encourages Nevadans who are worried about filing their taxes to file for an extension, which would give them until October 2025 to submit their returns. 

“A lot is certainly going to happen between now and then,” she said.