The proposed change comes amid ongoing legal battles over taxpayer data sharing with immigration authorities, raising concerns about compliance and potential revenue losses exceeding USD 300 billion. 

RF Report

The US Internal Revenue Service (IRS) is weighing whether to require taxpayers to disclose their citizenship status on 2026 tax forms, according to sources familiar with the discussions. The move would represent the Trump administration’s latest effort to integrate immigration enforcement across federal agencies.

Two versions under review

IRS officials are evaluating two versions of Form 1040, the standard individual tax filing document. The first contains routine updates reflecting tax law changes, while the second adds a checkbox asking filers to indicate if they are non-US citizens or hold dual citizenship. Treasury Department representatives declined to comment on the proposal when approached on Friday, 22 May 2026.

Currently, all immigrants—including those without legal status—use identical IRS forms as citizens when filing taxes. Tax payment history has traditionally served as an important consideration for undocumented immigrants seeking legal residency.

Data sharing controversy

Throughout 2025, the Treasury Department and Department of Homeland Security worked to share confidential taxpayer information with immigration authorities as part of expanded deportation operations. However, a federal judge blocked this practice in November following a lawsuit. The government has appealed that decision.

In February, the IRS acknowledged mistakenly sharing personal data of over 42,000 taxpayers with DHS. Such unauthorised disclosure of taxpayer information carries severe penalties, including potential imprisonment.

Economic impact concerns

Tax preparers across the country have reported clients expressing fear about filing 2025 returns due to IRS-immigration enforcement coordination. The Yale Budget Lab projects that reduced tax compliance among immigrant communities could cost the federal government USD 313 billion in revenue over ten years.

The IRS is also exploring alternative methods to identify citizenship status, including creating different codes within the nine-digit individual tax identification numbers that non-citizens use instead of Social Security numbers.

While federal law already bars undocumented immigrants from programs like Social Security, Medicare, and Medicaid, these individuals continue paying into such programs through income, payroll, and sales taxes.