Mass. tax preparers brace for "chilling effect" among immigrants
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Tax filings among immigrants fell sharply last year at a New Bedford nonprofit as filers feared their information could be used to target them for deportation.
- Brian Pastori, deputy director of the Community Economic Development Center, expects demand to plummet further this tax season.
Why it matters: That "chilling effect," as many call it, may hurt the state's coffers and put immigrants and citizens alike at risk, advocates say.
The latest: The Washington Post reported Wednesday that the Internal Revenue Service shared taxpayer data with the Department of Homeland Security, despite two federal rulings blocking a controversial information-sharing agreement between the agencies.
State of play: Under past administrations, federal authorities have assured immigrants they could file their taxes without risking deportation.
- "Now that trust is broken," Pastori told Axios on Tuesday.
- The 11-person nonprofit he works at, alongside national advocacy groups, is at the center of a federal lawsuit in Boston fighting DHS' efforts to use IRS data for immigration enforcement.
- Pastori said he and his colleagues have had to discuss the risks with clients who applied for individual tax ID numbers to pay taxes, with dozens opting out.
The other side: Asked about the Post report, a DHS spokesperson said in a statement that "under President Trump's leadership, the government is finally doing what it should have all along — sharing information across the federal government to solve problems."
Zoom in: The CEDC saw its waitlist dwindle as soon as Trump reentered office.
- The office had 35 applications for new ITINs last year — one-fourth of the volume seen a year earlier.
- Tax filings among ITIN holders at CEDC dropped 25% last year to just over 100 filers.
- Nonprofits serving immigrants in Cambridge, Boston and other parts of the state reported similar drops.
Threat level: In the Boston case, Judge Indira Talwani ruled that the DHS and IRS information-sharing agreement not only harms nonprofits like CEDC, but also citizens and non-citizens alike who could be misidentified as deportable.
- Talwani noted that nearly half of Korean Americans, for example, share one of three surnames.
- That risk could not only affect misidentified people, but their loved ones and neighbors, especially with DHS lawyers arguing that undocumented immigrants don't have Fourth Amendment protections, Talwani wrote.
Between the lines: Massachusetts Treasurer Deb Goldberg and officials from 15 other states sent a letter to Trump urging him to consider the economic fallout of immigration enforcement surges like the one in Minnesota.
- The consequences range from lower consumer spending to less state tax revenue from states that typically send more money than they receive from Washington, per the letter.
- Asked about the letter, White House spokesperson Kush Desai said in a statement that illegal immigration has had widespread economic consequences for the nation, blaming it for strains on public service and crimes against businesses, among other things.
Otherwise, Massachusetts officials have remained mum on the tax issue, despite community groups' calls for Attorney General Andrea Campbell to join the legal fight against the IRS and DHS.
- Campbell's office said it supports and is monitoring litigation on the issue.