A recent Washington Post article highlights a troubling trend: a sharp decline in tax filings from immigrant communities, driven by fear over a new IRS agreement to share confidential taxpayer data with the Department of Homeland Security (DHS). The move, made under the Trump administration, has raised alarm among tax professionals and clients alike — many of whom now fear that filing taxes could lead to deportation.
Carlos Lopez, CEO of Latino Tax Pro and founder of a multilingual tax firm in Salinas, CA, was featured in the article. He began his practice in 1986, helping immigrant farmworkers comply with tax laws under the Immigration Reform and Control Act. Lopez emphasized that trust in the IRS’s confidentiality has long encouraged immigrants to file taxes. But this tax season, his office saw a 7% drop in returns — a clear sign of shaken confidence.
“For years the IRS told us, ‘We will never share your info with any other government agency. Data is safe with us.’ So we trusted them,” Lopez said.
Other Key Points:
Widespread Decline in Filings: Firms like DAPA Multi services Advisors in Maryland reported a 50% drop in filings. Even immigrants with legal status delayed or skipped filing out of fear for undocumented family members.
Impact on Small Businesses: The fear extends to business owners and employees. Undocumented workers are avoiding sharing their ITINs with employers, making it harder for small businesses to hire legally.
Economic Consequences: Lower filing rates could cost the U.S. Treasury up to $479 billion over the next 10 years, according to Yale University research.
Broader Community Impact: With fewer immigrants filing taxes, applying for loans, home improvement permits, or business licenses becomes difficult — limiting long-term opportunities and economic mobility.
Shift in Financial Planning: Some undocumented immigrants are choosing to send money abroad instead of investing in the U.S., planning for futures in countries like El Salvador, Mexico, Colombia, and Peru.
