Washington, D.C. — The acting head of the Internal Revenue Service, Melanie Krause, has announced her resignation following internal disagreements over a newly finalized data-sharing agreement between the IRS and the Department of Homeland Security (DHS).

Krause becomes the third IRS leader to step down in 2025, highlighting a period of instability within the agency.

The controversy centers around an agreement that allows taxpayer data to be shared with immigration authorities to help locate undocumented individuals. According to reports, IRS legal advisors expressed concerns that the arrangement might conflict with federal privacy laws.

Sources familiar with the situation say Krause was largely excluded from the final negotiations due to her opposition to the plan.

In a statement, a Treasury Department spokesperson praised Krause’s leadership but did not directly reference the data-sharing issue. The department noted that the IRS is undergoing major changes aimed at increasing accountability and improving operations.

Krause’s departure follows that of her predecessor, Doug O’Donnell, who also declined to approve a similar agreement earlier in the year. The last Senate-confirmed commissioner, Danny Werfel, resigned earlier in the year as well.

According to Reuters, Krause plans to take advantage of a deferred resignation program offered by the IRS.

Meanwhile, the IRS has begun implementing a major workforce restructuring effort, including the closure of its civil rights office and planned staff reductions that may affect up to 25% of the agency’s workforce. These moves are part of a broader government efficiency plan currently being implemented across several departments.

Additional reports have also surfaced regarding internal financial systems within the federal government, raising concerns about budget tracking and transparency. Officials have described the systems as outdated and difficult to monitor, prompting calls for further modernization.