How potential IRS-ICE data sharing deal could impact the Bay Area

SAN JOSE, Calif. - Protesters gathered outside an IRS office in downtown San Jose on Tuesday to voice concerns about a Trump administration effort to turn over IRS tax data to immigration authorities.

What would IRS-ICE deal mean? 

What they're saying:

Local leaders said if successful, the effort could reduce tax revenues, potentially hurting local services.

San Jose has more than 50,000 small businesses, and local leaders estimate about half were started by immigrants. They said fear of potential immigration action tied to tax records is already having an impact.

Whether documented or not, small business owners and individuals are required to pay taxes. Even without a Social Security number, the IRS will issue an Individual Taxpayer Identification Number, or ITIN, which allows people to pay taxes regardless of immigration status.

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Mimi Hernandez, executive director of Prosperity Labs in San Jose, an incubator that helps small businesses in the community, said, "What we stipulate in order for us to be able to help them, is that they have to meet their tax obligations. So these are people who are paying into the economy."

Hernandez said having proper licenses and paying taxes is a key part of the process, but she has already had conversations with businesses that are afraid to file this year because of the possible link to immigration authorities.

‘Economic disaster’

Why you should care:

"It is an economic disaster. I mean we are shooting ourselves, and our economy in the foot as it is recovering from COVID and inflation that is occurring right now. People are not going to feel comfortable filing their taxes," Hernandez said.

According to the IRS, an ITIN is issued only for federal tax purposes. It does not qualify individuals for Social Security benefits, change immigration status, or authorize legal work in the U.S. But it does provide a way for anyone without a Social Security number to pay taxes.

San Jose District 5 Councilmember Peter Ortiz said, "It has already had a chilling effect on the east side and really throughout our Latino communities in the city of San Jose. We have already seen members of our undocumented community scared to file their taxes."

Ortiz said the money from both federal and state taxes flows directly to local cities, and the potential loss of that revenue could impact everyone, from the ability to provide police and fire services to road construction.

"I condemn it because these are taxpaying residents of our country, and our city of San Jose relies on those tax dollars and we would be directly impacted if that continues," Ortiz said.

At the moment, the exact framework of the potential deal between the IRS and ICE, or other immigration authorities, is not yet known.