Tax experts say fear of deportation and IRS data-sharing concerns are discouraging undocumented immigrants from filing taxes, potentially reducing federal revenue for years.
The Trump administration’s immigration crackdown could cause the US to potentially lose up to $479bn in lost tax revenue over the next 10 years, with enforcement deterring undocumented workers from filing their taxes this year, according to tax experts.
Tax advisors say major changes, including proposed data sharing with immigration enforcement, have made filing taxes risky for undocumented immigrants. Tax benefits for immigrant parents have also been removed, further removing incentive to file taxes at all.
Every tax season keeps Daisy Schmidt busy with typical accounting tasks, from bookkeeping to helping clients prepare their returns.
But with an ongoing Immigration and Customs Enforcement (ICE) crackdown, Schmidt has spent much of his time trying to calm clients who were too nervous to file. Despite her best efforts, many refused to file this year.
“Our target is the Latino community, and many people didn’t file taxes because of fear of ICE,” said Schmidt, a tax adviser. “They said: ‘If they can deport me, what am I filing taxes for?’”
Schmidt said this tax season, she has lost up to 75% of her clients at Crece Latino, the tax service firm she owns in Springfield Virginia. Other tax advisors who work with Latino clients say they have also seen a drop in clients after changes to federal immigration policy.
Last year, the Internal Revenue Service (IRS) made an agreement to share the names and addresses of undocumented immigrants with the Department of Homeland Security, the parent agency of ICE. Although a federal judge paused the data-sharing agreement in November and later ruled that it violated federal law, many are still worried about having their information passed to ICE.
