The acting head of the Internal Revenue Service, Melanie Krause, is stepping down following internal conflict over a newly approved policy that allows the sharing of taxpayer data with federal immigration enforcement.

Krause is the third IRS leader to leave the agency this year, highlighting ongoing instability within the IRS. Much of the turmoil appears rooted in political divisions, as some agency leaders have reportedly prioritized partisan agendas over the agency’s nonpartisan mandate.

On Monday, the IRS and the Department of Homeland Security (DHS) finalized a controversial agreement permitting DHS access to taxpayer information to help locate undocumented immigrants.

According to The Washington Post, senior officials at the Treasury Department, which oversees the IRS, sidelined Krause during negotiations over the agreement, anticipating her opposition. Legal experts at the IRS reportedly warned that the agreement could violate federal privacy laws.

Despite those warnings, Treasury Secretary Scott Bessent and DHS Secretary Kristi Noem signed off on the data-sharing arrangement.

“Melanie Krause has been leading the IRS through a time of extraordinary change,” a Treasury spokesperson said in a statement confirming her departure. The statement did not directly reference the data-sharing policy but emphasized ongoing efforts to improve data coordination across agencies to combat fraud and waste.

Krause’s exit follows the earlier resignations of Doug O’Donnell, who also refused to support a similar data-sharing plan, and Danny Werfel, the last Senate-confirmed commissioner, who stepped down on President Trump’s first day in office.

The agreement is likely to face legal scrutiny and political backlash, as it raises serious questions about taxpayer privacy and the proper limits of interagency data use.