IRS Faces Turmoil Amid Controversial Data Sharing Deal

WASHINGTON, D.C. — The Internal Revenue Service is grappling with significant upheaval following an unprecedented data-sharing agreement between the agency and Immigration and Customs Enforcement. The agreement, which aims to facilitate the identification of undocumented immigrants, was finalized despite internal resistance from career IRS officials.

Sources indicate that officials at the IRS repeatedly rejected requests from political appointees close to President Donald Trump and the Department of Government Efficiency, led by entrepreneur Elon Musk. In late February, the IRS’s chief privacy officer informed the acting commissioner that there was “no clear legal authority” to share sensitive taxpayer information, according to an insider.

One IRS career official reportedly expressed doubts, stating, “This doesn’t sound quite kosher to me.” Despite these concerns, efforts to pursue the data-sharing initiative continued, and by early March, the agency’s political leaders had circumvented resistance by demoting legal advisers who voiced objections, ultimately sealing the deal with ICE.

“It felt like a hostile takeover,” a former IRS employee described the situation. “If we would have imagined some foreign government sending in adversaries to take us over, this is what it would have felt like.” This internal conflict has prompted an unprecedented wave of departures among seasoned IRS officials, including the agency’s acting commissioner, marking the third leadership change in 2025 alone.

The backdrop of this turmoil coincides with the tax season as Americans rush to file their tax returns before the deadline on Tax Day. Heightened uncertainty has also led to questions about the long-term implications for an agency responsible for collecting nearly all federal revenue. Former IRS Commissioner Danny Werfel articulated the bleak outlook, stating, “It’s hard to think of anything positive that will come from the amount of uncertainty and turbulence at the IRS right now.”

Multiple sources confirmed that tensions within the IRS remain extremely high. Plans for a wave of mass layoffs loom, potentially impacting up to 20% of the agency’s approximately 100,000 workforce. The IRS has seen its infrastructure shaken during a critical period of economic activity, further complicating an already fraught tax season.

In a striking analogy, a senior IRS official likened the experience to an unsettling sports scenario: “It’s like going into your final practice before the Super Bowl and then telling the players and staff that they’ll get texts during the practice about whether they’re fired or not. And whether you win or lose the big game, more people will then be fired.”

As public scrutiny intensifies, the Senate has yet to schedule hearings regarding Trump’s nominee to lead the IRS, former Congressman Billy Long of Missouri, leaving the agency in a state of limbo amid changing dynamics in federal leadership.