Data Sharing Between Tax and Immigration Authorities: What It Means for U.S. Visitors and Long-Term Stayers
- Carina Luo
- 1 day ago
- 4 min read
Recent news has put a spotlight on immigration enforcement in the United States — not just on the streets, but deep within government data systems. In addition to widely shared videos of aggressive ICE enforcement actions, there’s another development that has serious implications for anyone with ties to the U.S.: expanded interagency data sharing between the IRS, immigration authorities, and other federal databases.
In April 2025, the Internal Revenue Service (IRS) entered into a data-sharing agreement with U.S. Immigration and Customs Enforcement (ICE), designed to allow ICE to access certain taxpayer information for immigration enforcement purposes — a marked departure from decades of practice where tax data was kept strictly confidential.
In November 2025, a federal judge blocked part of that agreement, ruling that the IRS’s sharing of taxpayer addresses with ICE was “arbitrary and capricious” and likely unlawful under the Administrative Procedure Act. However, the broader legal battle is far from settled, and data-sharing on other fronts is moving forward.
In early January 2026, a court allowed the Department of Health and Human Services to resume sharing Medicaid enrollee data with ICE for immigration enforcement, drawing from a dataset covering tens of millions of people. Under this agreement, ICE can access information such as citizenship status, contact details, date of birth, and Medicaid ID for individuals deemed to be residing unlawfully in the country.
Taken together, these developments show a clear trend: government databases are no longer siloed. Immigration enforcement agencies are gaining pathways into systems — whether tax records, healthcare data, or benefit databases — that many taxpayers once assumed were confidential or off-limits.
Why This Matters for People Who Travel or Stay in the U.S.
Most of the focus around U.S. tax residency rules centers on the 183-day test: if you spend 183 days or more in the United States during a year, you generally meet the substantial presence test and are considered a U.S. tax resident. But under current IRS policy, residency is actually determined using a three-year weighted formula, and a year in which you spend 121 days or more in the U.S. can contribute significantly toward that residency test over time.
For visitors such as parents on a B-2 tourist visa, students, or professionals on short assignments, this change in data access means:
U.S. tax residency may be determined more quickly. Even if someone doesn’t apply for a green card, their entry/exit records combined with other data could trigger tax residency status sooner than they expect.
Immigration and tax systems are increasingly linked. Government agencies can cross-match data from tax returns, healthcare databases, and entry/exit systems to build a detailed picture of an individual’s location and activity.
Privacy assumptions are outdated. Databases once treated as confidential — like Medicaid records or IRS filings — are now being accessed for purposes beyond original intent.
Three Practical Considerations for Frequent Travelers and Overseas Families
Here are important planning points for those who travel frequently between the U.S. and other countries or maintain ties on both sides:
Focus on the 121-Day Rule
Don’t fixate only on the 183-day threshold. Because of the three-year weighted formula the IRS uses to assess tax residency, staying under 121 days per year offers a safer margin for avoiding unintended U.S. tax residency status.
Form 8840 Can Help — But Has Limits
If you exceed the weighted presence test but didn’t reach 183 days in a calendar year, you may be able to file Form 8840 (Closer Connection Exception) to demonstrate your tax home and substantial ties are outside the U.S. This can help avoid U.S. tax residency status.
Be aware that Form 8840 is not available to individuals with pending green card applications, and it must generally be filed by the next tax filing deadline (typically June 15 for many calendar-year expatriates).
Keep Your Data Consistent Across Systems
Government matching now happens rapidly. Inconsistent addresses or contact information across:
immigration entry records,
tax filings,
healthcare registries,
banking or benefit systems …
can trigger data flags that lead to additional inquiries. Ensure your address and contact information are consistent across systems to minimize the risk of unintended data matches or compliance misunderstandings.
What This Means for Tax Compliance
As data sharing between tax, immigration, healthcare, and financial systems continues to expand, assumptions that once felt safe no longer apply. The cost of missteps today is not just higher taxes, but unexpected residency exposure, compliance issues, or avoidable scrutiny.
If you or your family frequently travel to the U.S., maintain assets across borders, or are unsure how your time in the U.S. may affect your tax status, now is the time to review your situation proactively. LightUp Tax works with internationally mobile individuals and families to assess residency risk, align tax filings with immigration realities, and build compliant strategies that preserve flexibility and peace of mind.
At LightUp Tax, we help internationally mobile individuals and families stay compliant while minimizing unintended tax and residency exposure. As data sharing between tax and immigration authorities expands, proactive planning matters more than ever. If you’re unsure how your time in the U.S. or your filings may be viewed under current rules, book a free discovery call with one of our experienced CPAs. A short conversation today can help you avoid costly surprises and protect your flexibility going forward.