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On April 7, 2025, the Internal Revenue Service ("IRS") and the U.S. Immigration and Customs Enforcement ("ICE") entered into a Memorandum of Understanding (the "MOU") enabling ICE to request and receive taxpayer identity information from the IRS for immigration related enforcement without needing to obtain a court order. Since then, the MOU has been subject to multiple legal challenges, one of which is on appeal before the D.C. Circuit Court of Appeals and oral argument occurred in early October 2025. Employers should be aware of the potential implications of this information-sharing arrangement. Without this MOU, ICE would have to rely on other channels to gather address information, such as the National Crime Information Center, DMV databases, or information sharing agreements with police departments.
For employers, this MOU signals a more directed approach to leveraging employees' data in order to achieve more aggressive immigration enforcement, which may include criminal enforcement directed at employers.
The MOU establishes a framework for ICE to access a taxpayer's last known address when investigating violations of designated criminal statutes. Notably, the MOU highlights persons under investigation for violations of 8 U.S.C. § 1253(a)(1), which criminalizes willfully remaining in the United States more than 90 days after a removal order becomes final. This MOU represents a shift from prior IRS practice and tests the boundaries of the Internal Revenue Code, which generally protects taxpayer data from easy access by other agencies.
How the MOU Changes Enforcement
Section 6103 of the Internal Revenue Code contains broad confidentiality rules surrounding the disclosure of specific taxpayer and tax return information. However, the MOU relies on an exception that permits disclosure of certain taxpayer information to a requesting agency that is either preparing for a criminal proceeding or when an investigation may result in a proceeding.
This exception creates a formal channel for ICE to cross-check immigration enforcement targets against IRS records, allowing ICE to quickly identify a taxpayer's home address for immigration enforcement efforts. The process for ICE obtaining these tax records from the IRS requires ICE to submit a written request to the IRS identifying the following information:
- The targeted individual;
- The relevant taxable periods;
- The specific criminal statute under investigation by ICE (i.e. 8 U.S.C. § 1253(a)(1));
- The date of the final order of removal and related case number;
- A statement showing why the identification and address information is relevant to ICE's pending criminal investigation; and
- An attestation that the address information will only be used by officers/employees of ICE solely for reasons articulated in 8 U.S.C. § 6103(i)(2)(A) pertaining to the enforcement of 8 U.S.C. § 1253(a)(1).
The IRS then will review the requests for "completeness and validity" and transmit the requested information to ICE, if identifiable.
Importantly for employers, the MOU only permits release to ICE of identity information – not full tax returns, financial details, or employer information. Additionally, ICE can only use the information for the preparation for judicial and administrative proceedings, in the designated investigation that may lead to such proceedings, or in any subsequent criminal proceedings. ICE must also comply with IRS Publication 1075, which provides standards for safeguarding sensitive taxpayer information.
Legal Challenges and Criticism
Since its execution in April 2025, the MOU has faced multiple challenges in federal court and drawn sharp criticisms from both privacy advocates and members of Congress. As an example, in Centro de Trabajadores Unidos v. Bessent (No. 1:25-cv-00677, D.D.C.), advocacy groups sought a preliminary injunction to block implementation of the MOU. They argued that the MOU would in practice be used for civil deportations despite the stated focus on criminal investigations. The U.S. District Court for the District of Columbia denied the plaintiffs' request for a preliminary injunction, concluding that the MOU's language limits disclosures to criminal matters and aligns with the plain text of § 6103(i)(2). On appeal to the D.C. Circuit Court of Appeals, 93 members of Congress argued in an amicus brief that the MOU could erode taxpayer trust, deter voluntary compliance, and blur the lines between tax administration and immigration control. The amicus brief emphasizes that § 6103 was designed to shield taxpayer information from political or unrelated enforcement use – a safeguard the members of Congress state it established to protect against the very kind of cross-agency integration the MOU now formalizes. The DC Circuit held oral argument in the case on October 3, 2025 (No. 25-5181, D.C. Cir.), and a decision is still pending.
Potential Risks for Employers
While the MOU is focused on criminal immigration investigations, it remains to be seen how broadly ICE will interpret its authority to obtain tax information and to what extent this new discovery mechanism for immigration enforcement may impact employers. Nevertheless, the current Administration remains focused on immigration enforcement and is seeking to use all the tools in its toolkit to advance its goals. In this context, employers face heightened risks for criminal enforcement against their companies, in addition to workplace sweeps, audits, inspections and other administrative requests.
As we previously described, the recently passed One Big Beautiful Bill Act allocates $170 billion to immigration enforcement, which includes over $75 billion allocated for ICE. This signals a significant expansion of ICE's capacity extending beyond the scope of the MOU to include immigration audits, site visits, and notices of inspection.
The MOU theoretically allows for a more targeted enforcement approach by giving ICE access to specific home address information that does not extend to employer information. With this data, ICE could shift its focus from broad workplace raids to more precise neighborhood-level operations. This approach may offer employers some relief from large-scale disruptions. However, in practice, ICE is likely to continue large-scale raids on employers as they remain a more resource-efficient method for ICE enforcement.
As a result, employers will likely continue to deal with workforce reduction given ICE's increased capacity and the opening of alternative avenues of enforcement like the MOU. Employers across all sectors should proactively review hiring, payroll, and compliance protocols, develop an internal enforcement response plan, and monitor the outcomes of pending legal challenges regarding the MOU.
For more resources regarding immigration enforcement, please see the following Foley publications:
- The One Big Beautiful Bill and Workplace Immigration Enforcement
- Your Company Received an ICE Notice of Inspection—Now What?
- How Employers Can Prepare for Immigration Audits and Visits
- Top Tips for Companies to Prepare for an Immigration Visits
- Vigorous Immigration Law Enforcement Is Here: I-9 Inspections, Site Visits, and More
- Practical Implications of Immigration Enforcement Activity on Retirement Plans
- Practical Implications of Immigration Enforcement Activity on Benefit Plans – Part II
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
