The turmoil at the IRS continues as the agency’s head, Acting Commissioner Melanie Krause, has announced she will resign. She will be the third IRS head to step down since Donald Trump’s inauguration.
Krause is leaving, people familiar with the matter told The Washington Post, because the Treasury Department and the Department of Homeland Security did not include her when drafting an agreement to force the IRS to give taxpayer data to immigration officials. Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem signed the agreement on Monday, April 7. Krause learned the agreement had been signed when it was reported on Fox News, the Washington Post said.
The agreement would allow ICE to access undocumented immigrants’ tax data, including their addresses in some cases, to make it easier to find and deport them. IRS lawyers advised Bessent and Noem that the deal is likely illegal. Workers’ and immigrants’ rights groups have sued to block it.
The agreement also violates what former Commissioner Lawrence Gibbs, speaking to the Wall Street Journal, called “bedrock belief at the IRS.” The agency has long assured undocumented immigrants that their data won’t be used to prosecute them, in order to encourage them to file, and allows them to use special identification numbers in lieu of Social Security numbers to do so. “This is what encourages taxpayers to tell you their private and confidential information,” Gibbs said.
Krause, who is using the IRS’s deferred resignation program, also felt that she lacked the power to affect changes DOGE was making to the agency, such as mass layoffs, insiders told the Washington Post. “She no longer feels like she’s in a position where she can impact the decision-making that’s happening. And [she believes] that some of the decisions that are being made now are things the IRS can never recover from,” one of the informants said.
Krause’s departure comes at a chaotic time for the IRS. Some 7,000 probationary employees, laid off in February, are in a state of limbo, as the Supreme Court has recently paused a US district court judge’s ruling that their firings were illegal. The agency, under the direction of DOGE, plans to lay off around 20,000 people, or 25% of its workforce, according to the Washington Post.
Krause, formerly COO of the IRS, succeeded Doug O’Donnell, who retired amid DOGE efforts to access sensitive taxpayer data. O’Donnell succeeded Commissioner Danny Werfel, who stepped down in January after Trump threatened to fire him. Other IRS leaders, including the agency’s CFO, chief risk officer, and chief privacy officer, have also left or are planning to do so, The Wall Street Journal reported.
This report was written by Courtney Vienand was originally published by CFO Brew.
