By Catherine E. Shoichet and Marshall Cohen

(CNN) — Undocumented immigrants who’ve been paying taxes in the US are facing an unsettling possibility: This year, that may be used against them.

A recent data-sharing deal between the Internal Revenue Service and the Department of Homeland Security is sparking widespread concern in immigrant communities – though some details about how the deal could work haven’t been disclosed.

The agreement has left many undocumented immigrants feeling hesitant to pay taxes this year and uncertain about what to do, according to advocates.

“A lot of people are feeling betrayed,” says Adriana Rivera of the Florida Immigrant Coalition.

Here’s a look at what’s happening and why it matters:

Some who’ve paid taxes for years now are scared to file and ‘freaking out’

For decades undocumented immigrants were told if they came forward, registered with the IRS and paid their taxes, their private information would stay secret.

This year, many undocumented families that previously paid their taxes in good faith now are reconsidering, Rivera says.

“It’s scary to think that you are going to be hunted through a method that you have used for years in order to give back to your communities,” she says. “And it also begs the question, ‘Why would they be using this tactic, which is based on my honesty…against me?’”

Confusion is widespread, Rivera says, especially given how dire the consequences could be for some who face deportation.

“People are really asking themselves, ‘What do I do? Do I continue paying taxes?’ Because they understand the importance of paying taxes. They understand the legality of paying taxes and they understand this duty of paying taxes,” she says. “But it’s a very confusing thing to navigate where this duty that I have, that I’m about to do, it’s something that can cost me, you know, family separation and sometimes even my life.”

Attorney Neil Weinrib says he’s received an “avalanche” of concerned emails unlike anything he’s seen in decades practicing immigration law.

“Our clients are freaking out,” he says.

“It’s having a tremendous chilling effect on foreign nationals who are in the United States,” he added.

Weinrib showed CNN snippets of frantic emails he received from clients. One message from an Indian national said, “What is this news with the IRS? … IRS head will share all informations (sic) with DHS? … If my wife gets caught with my son, what should she do?”

We don’t know some key details about how the data-sharing agreement would work

Parts of the 15-page “memorandum of understanding” between the IRS and DHS are redacted, making it difficult to discern exactly what the IRS will provide. The terms of the deal say ICE will come to the IRS with the names and address of taxpayers that they believe have violated federal immigration laws.

CNN previously reported that the IRS would then cross-reference that information with existing taxpayer data and confirm its accuracy.

Justice Department lawyers said in a recent court filing that the newly inked arrangement is lawful, that information will only be shared in ways permitted by the federal tax code and that the deal “includes clear guardrails to ensure compliance.”

Homeland Security Secretary Kristi Noem told reporters the agreement would help her department go after criminals.

“I think the American people?need to be confident?in the fact that their personal privacy?will be protected, and that this will be?a targeted agreement?that will go specifically?after individuals?who do perpetuate?violence and enact crimes?in this country,” she said, even though data-sharing in the agreement isn’t restricted to targeting violent criminals.

Supporters of the Trump administration’s immigration crackdowns have praised the agreement as a common-sense solution.

“I am hard-pressed to understand what possible legitimate objection anyone could articulate on this,” said Jessica Vaughan of the Center for Immigration Studies, which favors restricting immigration.

But the move is already facing at least one legal challenge

Two immigrant rights groups filed a lawsuit last month arguing that disclosing tax data for immigration enforcement purposes would be illegal.

The groups argue federal law requires a court order before the IRS can provide taxpayer data to another agency?“exclusively for use in locating” an individual. They also argue the Trump administration is trying to stretch a provision of the tax code, which allows data-sharing for individual criminal probes, into a bulk collection program.

Their case includes a declaration from an anonymous worker who says she was previously advised that the IRS would keep her data private.

“That protection was very important to me because I am worried that if DHS obtained my name and address from the IRS, I would be at risk of being subjected to removal proceedings that could lead to separation from my family and the life I have made here,” the declaration says.

A hearing in the case is scheduled for Wednesday in DC federal court.

How undocumented immigrants pay taxes — and why

Undocumented immigrants contribute some $100 billion annually in federal, state and local taxes, according to an estimate released last year by the liberal Institute on Taxation and Economic Policy. That includes taxes paid through automatic withholding from paychecks and through filed income tax returns.

Since 1996, the IRS has allowed undocumented immigrants and other foreign nationals ineligible for Social Security numbers to file taxes using what’s known as an Individual Taxpayer Identification Number, or ITIN. And the agency has stressed that data from applications and filings would be private for this group, just as it is for others.

As of December 31, 2022, there were more than 5.8 million active ITINs, according to an audit report.

In immigration court proceedings, it’s common to see attorneys present stacks of tax documents as evidence.

“It shows that you’re in good standing, that you’re an honest person,” Rivera says.

Experts have also noted that tax records showing work history and presence in the US might help undocumented immigrants in the future if lawmakers pass immigration reform.

Most undocumented immigrants would take steps to regularize their immigration status if they had a pathway to do so, Rivera says.

“Because they can’t, they are doing the next best thing, which is contributing to their taxes. But now you’re taking this very American thing, which is paying your taxes every year, and you’re using it against (them),” Rivera says.

Experts say the new policy could cost billions in lost revenue

The Budget Lab, a nonpartisan research center at Yale University,?estimates?that the federal government could see a $300 billion revenue drop over the next decade because of this policy.

“Losses could be more – and not just with undocumented population – as this action, along with many others, make people more nervous about sharing data with the IRS and skeptical of the tax system writ large,”?tweeted?Natasha Sarin, a Yale Law School professor who runs the research lab and previously served in the Biden-era Treasury Department.

But in some communities, this tax season appears to be proceeding normally.

Martha Silva, co-executive director of Conexión Américas in Nashville, Tennessee, says her office has been busier than ever.

The nonpartisan organization helps hundreds of people file taxes every year as part of an IRS program that provides free tax preparation assistance to underserved communities.

Silva says she expects the number of participants could decrease in the future as more people learn about the new policy and see how the deal is implemented. It’s likely, she says, that there will be fewer applications from would-be taxpayers coming forward to get ITIN numbers.

For organizations like hers that have helped promote the tax agency’s message to immigrant communities, Silva says it’s a scary and disappointing time.

“We have been very vocal about building that trust that the IRS wanted to build. … It’s like we went through the process and our collective work has been disregarded,” she says.

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