Immigrant tax reporting aside, this agreement violates the sanctity of the privacy bond between taxpayers and the IRS. We voluntarily give them our most private data and that of our household members and they lock it up so tightly that most of their own employees can't access it. In my Master's course I learned that IRS can share your data with NO ONE, the only exceptions being suspected terrorism and money laundering. We used to joke that you could list your occupation as Hit Man or Bank Robber and the IRS would keep it a secret. Breaking that bond can further dent the agency's tarnished image.
ICE is demanding this disclosure to get immigrants' addresses. I think the tax return is not a good place to look. People move, have PO boxes, use someone else's address to get their mail because their own box is insecure, still use Mom's address because they're away at school or she always handles everything. I'm sure all of us have had a client or two who suddenly notices that the address we've been using for five years has the wrong street number of spelling.