Tax consultants working with immigrant communities across California are reporting a sharp drop in tax filings as undocumented families fear their tax information could be shared with immigration authorities, according to KQED.
Empty offices during peak season
Tax season in California traditionally brings a surge of clients to small consulting firms serving Latino neighborhoods. This year presents a different picture. Consultants in immigrant communities describe the decline as unprecedented.
Many undocumented families have faithfully paid taxes for years using Individual Taxpayer Identification Numbers (ITINs) — special numbers the IRS issues to those ineligible for Social Security Numbers. Filing returns allowed them to receive child tax credits and build financial histories. Now this established system is breaking down.
Fear outweighs benefits
The reason for the mass withdrawal is straightforward. Families worry that information from tax returns could be shared with ICE or other immigration agencies. These concerns spread rapidly through word of mouth and Spanish-language social media, according to KQED.
The IRS is formally required to protect taxpayer confidentiality. Section 6103 of the Internal Revenue Code prohibits the agency from sharing tax return data with other federal agencies without a court order or direct congressional authorization. But trust in this protection among undocumented immigrants is rapidly eroding.
Political rhetoric surrounding undocumented immigration intensifies the anxiety. People who have lived for decades under what consultants describe as an unspoken agreement — pay taxes, avoid attention, remain in the shadows — no longer feel certain this arrangement holds.
Financial consequences for families
Refusing to file returns primarily hurts the immigrants themselves. Families lose eligibility for Child Tax Credits and other deductions. For low-income households, these amounts can total thousands of dollars annually.
Without a tax history, it becomes harder to rent housing, open bank accounts or obtain auto loans. Even one missed season can significantly complicate restoring a financial history built over years, consultants said.
Budget losses
California receives substantial revenue from undocumented taxpayers. The Institute on Taxation and Economic Policy estimates undocumented immigrants nationwide contribute approximately $96.7 billion annually in federal, state and local taxes — including sales taxes, income taxes and property taxes. Mass refusal to file returns could reduce these contributions.
For nonprofit organizations providing free tax preparation through the Volunteer Income Tax Assistance (VITA) program, declining client numbers raise questions about continued funding. Fewer clients make it harder to justify grants.
What’s next
The federal tax filing deadline is April 15. Before that date, advocacy organizations are trying to convince immigrants not to skip filing, emphasizing legislative confidentiality guarantees. Several legal clinics in the Bay Area are conducting information sessions in Spanish.
The IRS has not yet published data on ITIN filing trends for the current season.