IRS chief to quit over deal to share data with immigration authorities, per Washington Post

Boston Globe

08-04-2025

Treasury Department officials in recent days sought to circumvent IRS executives so immigration authorities could access private taxpayer information, the people said. Those conversations largely excluded Krause's input.
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Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi L. Noem signed an agreement Monday allowing the practice, although IRS lawyers had counseled that the deal probably violates privacy law. Krause learned of the deal after representatives from the Treasury Department released it to Fox News, the people said.
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Disagreements over the agency's future direction also factored into Krause's decision to leave, the people said. She felt unable to push back on moves the U.S. DOGE Service was forcing through the agency, the people said, including dramatic staffing cuts, a technology infrastructure overhaul and long-term IRS priorities.
'She no longer feels like she's in a position where she can impact the decision-making that's happening,' said a person familiar with the situation. 'And [she believes] that some of the decisions that are being made now are things the IRS can never recover from.'
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Representatives from the White House and Treasury Department did not immediately respond to requests for comment.
Krause was the IRS's chief operations officer before she became acting commissioner on Feb. 28. Her predecessor Doug O'Donnell retired rather than clash with DOGE and immigration enforcement officials who wanted broad access to confidential personal taxpayer data.
O'Donnell replaced Danny Werfel, the Biden-appointed IRS commissioner who hoped to remain in office during Trump's term. But Trump announced plans to fire him and bring on former congressman and auctioneer Billy Long (R), a six-term lawmaker without experience on tax-writing committees.
The Trump administration has moved aggressively to bring the IRS in line with the president's priorities. Officials held a recent gathering with tax IT engineers to discuss building a cross-government data-sharing system that would allow agencies to use private personal tax information to hunt for fraud in social safety net programs. IRS lawyers warned Krause that the initiative likely violated privacy laws, which prevent the sharing of personal data even with other government agencies.
Monday's agreement with DHS would permit immigration enforcement officials to obtain highly protected tax information for people the Trump administration hopes to detain and deport. A redacted copy of the memorandum was filed in the U.S. District Court for Washington, D.C., as part of a lawsuit brought by worker and immigrant advocacy groups seeking to block the data-sharing.
The possibility of such an agreement had raised alarms among current and former IRS officials who said it was a privacy breach and contravened the tax agency's longtime guarantee that taxpayers suspected of being in the country illegally wouldn't have their information turned over to immigration enforcement. Undocumented workers' wages are subject to the same tax withholding and reporting requirements that applies to other U.S. residents.
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DHS officials previously suggested they'd ask the IRS for help locating 7 million people. There are about 11 million undocumented immigrants in the United States, according to federal officials' estimates.
Improper disclosure of tax information is punishable with prison time and hefty fines. Taxpayers whose privacy is violated are entitled to monetary compensation.
Under the terms of Monday's agreement, ICE officials must provide the targeted person's name and address, and the specific reason disclosure could be relevant to a non-tax-related criminal investigation.
DHS spokeswoman Tricia McLaughlin said the 'government is finally doing what it should have all along: sharing information across the federal government to solve problems.'
The memorandum sets out a 'clear and secure process to support law enforcement's efforts to combat illegal immigration,' a Treasury Department spokesperson said.
Krause is the latest executive to leave the IRS amid a broad leadership shake-up. Employees who accept the deferred resignation offer are set to leave the agency on April 28, roughly two weeks after the April 15 tax filing deadline.
Dozens of IT and cybersecurity officials have been placed on leave. About 7,000 employees were laid off in February, with more cuts announced last week.
The administration plans to slash the agency's headcount by about 25 percent compared to where it was in January, as part of the White House's effort to shrink the size of the federal government. IRS officials recently told employees the agency is undergoing a reduction-in-force, starting with closing its civil rights office, and the Treasury Department is offering early retirement to some employees aged 50 and older.
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Younger employees can until mid-April sign up for the deferred resignation program Krause opted for, though not every position is eligible.