Acting IRS Chief Resigns After Refusing to Comply With Illegal Immigrant-Sharing Deal
The Treasury Department revealed Tuesday that the acting leader of the Internal Revenue Service will be stepping down, following her opposition to a recent policy allowing the transfer of tax data on undocumented immigrants to federal law enforcement.
Melanie Krause, the current IRS commissioner, is now the third official to depart the agency this year—a period marked by controversy and a perception that "left-wing ideologues" are prioritizing political beliefs over their "pledge to serve as non-partisan government employees."
On Monday, the IRS and the Department of Homeland Security concluded a new pact enabling the exchange of taxpayer information with immigration enforcement agencies in an effort to track down individuals residing in the country illegally.
According to The Washington Post, Treasury Department officials—under whose jurisdiction the IRS falls—have recently excluded Krause from key discussions. Her apparent opposition to the data-sharing deal may have motivated her marginalization, the report suggests.
Despite legal pushback from IRS counsel, Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem went ahead with signing the agreement Monday. Attorneys had warned that this move may breach existing federal privacy protections, the Post noted.
A Treasury spokesperson confirmed Krause’s resignation via email, stating that she had been “leading the IRS through a time of extraordinary change.”
Although the spokesperson didn’t directly mention the newly signed data agreement, they emphasized that the agency is "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 departure follows that of her predecessor, Doug O’Donnell, who resigned after declining to endorse a similar deal with DHS earlier this year. The last Senate-confirmed commissioner, Danny Werfel, exited the role on President Donald Trump’s first day in office.
Sources familiar with Krause’s decision say she plans to take part in the IRS’s deferred resignation program. Speaking anonymously, one individual told Reuters that her resignation was partly driven by unease over the finalized immigration data-sharing deal.
Meanwhile, the IRS has begun implementing significant workforce cuts, starting last Friday. These reductions include the shutdown of the agency’s civil rights division and layoffs that could impact up to a quarter of its personnel.
These sweeping changes are part of a federal government overhaul led by President Trump’s newly established Department of Government Efficiency (DOGE), headed by billionaire entrepreneur Elon Musk. The restructuring effort has already eliminated over 200,000 federal jobs.
Earlier this month, Musk appeared on Texas Senator Ted Cruz’s podcast, where he warned that “magic money computers” within the government were issuing payments "out of thin air," with legislators remaining largely unaware of how funds are being allocated.
According to Musk, 14 such systems have been identified across the Treasury and other federal agencies. These machines reportedly facilitate large financial transfers with limited accountability or justification.
In some departments, Musk said, spending discrepancies could amount to 5 percent of the reported budget. Senator Cruz speculated that these irregular payments could potentially reach “trillions” of dollars.
“They’re mostly at Treasury,” Musk said, referencing findings from his DOGE team, “but there’s some at [Health and Human Services], there’s one or two at State, there’s some at [the Department of Defense].”
“I think we’ve found now 14 magic money computers. They just send money out of nothing,” he told Cruz.
Explaining the issue further, Musk noted that the existence of these machines undermines the Treasury’s ability to offer lawmakers a complete picture of federal spending.
“You may think that government computers all communicate with each other, synchronize, and accurately calculate where funds are going, making the numbers you see as a senator the real ones. They’re not,” he said.