IRS CEO grilled over data sharing and workforce cuts
House Democrats pressed Frank Bisignano, IRS CEO, during a hearing before the House Ways and Means Committee about two things rattling the tax agency right now:
The IRS is sharing taxpayer data with immigration authorities.
The agency is canceling its union contract with employees.
The hearing came during the middle of the 2026 filing season. That timing matters because the IRS depends on public trust to keep the voluntary tax system functioning.
Meanwhile, a federal Court ruling found the IRS violated the Privacy Rule 42,695 times when it mistakenly disclosed taxpayer address data to the Department of Homeland Security.
The data-sharing controversy
The dispute centers on an April 2025 agreement between the IRS and immigration enforcement agencies that allowed limited tax data to be used in criminal investigations involving immigrants.
Under federal tax privacy rules, another agency generally must already know the taxpayer's name and address before requesting confirmation from the IRS.
A federal judge found that the standard was repeatedly ignored.
In Court filings, the IRS acknowledged it mistakenly released too many taxpayer addresses to DHS. The judge counted roughly 42,695 violations of the disclosure rule.
During the hearing, Bisignano said:
No IRS employees were fired or disciplined for the mistake.
The agency will not discuss the issue because litigation is ongoing.
He did say the IRS has strengthened internal oversight by having the chief risk and control officer report directly to the CEO and by running weekly risk management meetings.
Translation: they’re trying to look like they discovered the concept of internal controls.
Why lawmakers say this matters
Democrats argued the incident risks undermining voluntary compliance.
Rep. Mike Thompson put it bluntly: the U.S. tax system works only because taxpayers believe their information will remain confidential.
If people start to think that tax filings could end up in immigration enforcement databases, some will stop filing.
That’s the nightmare scenario for the IRS.
Not because of politics. Because the entire tax system depends on self-reporting.
The union contract fight
The hearing also turned into a labor dispute.
On February 27, the IRS told employees it was terminating its collective bargaining agreement with the National Treasury Employees Union.
The union represents roughly two-thirds of IRS workers.
Union leaders say the contract is still legally binding. The IRS says federal employees already receive strong benefits, and the contract is unnecessary.
Ranking member Richard Neal challenged the move during the hearing. Bisignano responded that employees would lose nothing.
That claim is now heading toward what appears to be inevitable litigation.
The workforce backdrop
All of this is happening after a major staffing reduction.
Following government downsizing efforts, the IRS has lost about 25% of its workforce since last year.
Running the tax system with a quarter fewer employees while simultaneously adding political controversies is the bureaucratic equivalent of fixing an airplane mid-flight while removing parts.
Refunds and the 2026 filing season
Republicans at the hearing focused on the one metric voters actually notice: refunds.
Bisignano said refunds are arriving:
Faster
Larger
Average refund so far in the 2026 filing season:
$3,804
About 10% higher than the previous year.
Direct-deposit refunds are averaging nine days, according to the IRS.
He projected the final average refund could be $1,000 higher than last year.
Democrats argue the tax law driving those refunds mainly benefits higher-income taxpayers.
Shocking revelation. Tax policy tends to involve distributional fights.
The nonprofit investigation question
Another issue quietly lurking in the background involves tax-exempt organizations.
Bisignano told lawmakers he has not received requests from the Trump administration to investigate specific nonprofit groups.
That statement matters because allies of Donald Trump have floated the idea of revoking tax-exempt status from organizations they believe support political violence or oppose administration policies.
One public example mentioned by allies: Harvard University.
Targeting nonprofits through the tax code is politically explosive because the IRS has long tried to avoid appearing partisan in enforcement.
The real issue beneath the hearing
Strip away the speeches, the congressional theater, and the problem becomes obvious.
The IRS currently faces three simultaneous pressures:
Fewer employees
Higher political scrutiny
Growing responsibilities across agencies
Then someone decided it would also be a good time to experiment with sharing immigration data.
Predictably, the system broke in several thousand places.
The voluntary tax system runs on one fragile assumption: taxpayers believe their information is confidential.
When that assumption cracks, compliance cracks with it.
And that is a far bigger problem than a messy congressional hearing.