US IRS chief quits after immigration data-sharing deal

The IRS and Department of Homeland Security on Monday finalised an agreement under which taxpayer data will be provided to federal immigration authorities to help them locate undocumented immigrants.

The acting head of the Internal Revenue Service plans to resign, the Treasury Department said on Tuesday, a move that comes after the agency struck a controversial deal to share tax data on undocumented immigrants with federal agents.

Commissioner Melanie Krause will become the tax-collecting agency's third leader to exit since the start of the year, a chaotic period marked by the firing of thousands of its employees mandated by Elon Musk's Department of Government Efficiency.

Her departure also comes amid the busiest time of the year for the IRS, with the filing deadline for most individual tax returns falling on April 15.

On Monday, the IRS and Department of Homeland Security finalised an agreement under which taxpayer data will be provided to federal immigration authorities to help them locate undocumented immigrants.

Officials with the Treasury Department, of which the IRS is a part, had largely bypassed Krause in recent days in seeking to give immigration authorities access to the private taxpayer information, the Washington Post reported.

Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem signed the data-sharing agreement on Monday, even though IRS attorneys advised that the deal likely violated privacy laws, the Washington Post said.

"Melanie Krause has been leading the IRS through a time of extraordinary change," a Treasury spokesperson said in an emailed statement, confirming her resignation.

Without mentioning the data agreement, the spokesperson added that the agency was "in the midst of breaking down data silos that for too long have stood in the way of identifying waste, fraud, and abuse and bringing criminals to justice."

Krause's predecessor as acting commissioner, Doug O’Donnell, resigned shortly after refusing to sign a similar data-sharing agreement with the Department of Homeland Security in February. The last Senate-confirmed IRS commissioner, Danny Werfel, resigned on President Donald Trump's first day in office.

Krause has opted to apply for a deferred resignation program being offered by the IRS, according to a person briefed on her decision. The person, who spoke on condition of anonymity, said Krause's decision to retire was triggered in part by concerns about the data-sharing deal.

Krause did not immediately respond to a request for comment.

The IRS began making sweeping cuts to its workforce on Friday, gutting its civil rights office and implementing mass firings aimed at eliminating up to 25 per cent of its workforce.

The cuts are part of a major overhaul of the federal workforce that has already cost more than 2,00,000 workers their jobs. President Donald Trump has tasked billionaire Elon Musk with leading the reshaping and downsizing of the government.