Over the past two days, I’ve seen growing signs that intensified ICE activity is likely to disrupt the upcoming tax season. I work in a part of New Jersey where immigrants are the backbone of our community: our neighbors, workforce, and a large share of small business owners. Some communities here are estimated to be 80% immigrants.
Through my professional work, I know many of these individuals came to the U.S. lawfully, have remained law-abiding and tax-compliant, and properly applied for extensions of their work visas. In numerous cases, those extensions remain stalled for political or administrative reasons beyond the applicants’ control. Despite maintaining lawful presence during the pendency of those applications under federal regulation, they are increasingly fearful of immigration enforcement actions.
That fear has real economic consequences. Time, money, and emotional energy are being diverted from productive activity to defensive measures. Local businesses are already reporting sharply reduced sales as immigrant residents avoid public spaces. We are likely to see at least one grassroots economic shutdown if this continues, consistent with prior enforcement surges that produced measurable declines in retail activity and small-business revenue. The Federal Reserve Bank of Dallas documented the economic cost of fear in the immigrant community.
I am particularly concerned about tax compliance. Federal tax law requires filing and payment regardless of immigration status and tax return information is strictly protected from disclosure to immigration authorities under federal confidentiality law. Yet fear does not follow statutes. Some individuals who have consistently filed and paid taxes in prior years may now be too afraid to file at all. The IRS itself has acknowledged that immigration enforcement fear undermines voluntary compliance and local revenue collection. This is documented by the IRS National Taxpayer Advocate Reports in 2018 & 2020. The immigrants I know believe that ICE will have access to tax data.
What is most alarming is that this fear is not limited to non-citizens. Even U.S. citizens, some in highly visible professional roles, are reporting anxiety about wrongful stops or collateral encounters, a concern supported by prior civil rights investigations and documentation of mistaken or over-broad ICE actions detailed in the 2020 ACLU of New Jersey report. The immigrant lawyers I know are aware of the racist ICE attorney quoted as saying “Migrants’ are all criminals”, “How about we deport all the people who don’t belong here, rather than turn nice neighborhoods into third world bug hives.” They understand the risks they face from the incoming federal forces.
My greatest concern is that I may be underestimating what lies ahead. History shows that when fear suppresses economic participation and tax compliance, the damage compounds quickly and affects entire communities, not just the people being targeted but all of us.