Appeals court upholds order blocking IRS from sharing taxpayer data with ICE

IRS Must Stop Sending Taxpayer Addresses to Immigration Agencies, Court Rules

In a decisive ruling this Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit ordered the Internal Revenue Service to cease providing the addresses of taxpayers to Immigration and Customs Enforcement (ICE). The court held that the agency’s sharing of that data in 2024 violated federal privacy statutes and the tax‑confidentiality law that was enacted in the wake of the Watergate scandal.

The injunction that the appeals panel upheld was originally filed by a coalition of civil‑rights groups who argued that the IRS’s “Data‑Exchange Procedure” – a policy that had allowed ICE to request the last known addresses of non‑citizens suspected of illegal immigration – unlawfully bypassed strict legal safeguards. Those safeguards require that any agency seeking taxpayer information must demonstrate a specific, lawful reason for the request and that the request is tied to a particular, ongoing investigation or proceeding.

The court’s decision focused on a request ICE made in the summer of 2025 for the addresses of 1.28 million individuals who the agency alleged were illegal migrants. Judge Cornelia Pillard, who wrote the panel’s opinion, said the IRS “failed to require ICE to provide a specific reason why the requested return information is or may be relevant to a qualifying proceeding or investigation, as the statute demands.” She also noted that ICE had listed the same point‑of‑contact person for every single request, creating an “automated review of millions of records without any individual review or any other means of ensuring compliance with the legal prerequisites” for releasing taxpayer data.

The ruling was a blow to the Trump administration’s policy that had encouraged the IRS to supply taxpayer information to ICE in an effort to expedite deportations. Last year the IRS handed over roughly 47,000 taxpayer addresses to ICE under that policy, a practice that had already triggered a lawsuit. A lower‑court judge had previously blocked the policy, but the IRS had already released those records before the injunction took effect.

In the appellate opinion, Judge Pillard dismissed the administration’s argument that the injunction undermined law‑enforcement efforts. “That’s a gripe with Congress, not the court,” she said, underscoring that the court’s role is to interpret the law, not to decide policy priorities.

The court also found that the data‑exchange practice infringed on privacy laws, specifically citing Section 6103 of the Internal Revenue Code, which protects the confidentiality of tax return information for all taxpayers, whether citizens or non‑citizens. “The Data‑Exchange Procedure reduces noncitizens’ privacy rights in their tax returns,” the opinion read, “by providing a distinct, automated pathway for ICE to request noncitizens’ information.”

The decision has drawn sharp reactions from both sides of the political spectrum. A spokesperson for the Department of Homeland Security (DHS) told Reuters that the agency disagrees with the ruling and would continue to use “every lawful tool available” to locate and remove illegal aliens who have final removal orders. Meanwhile, civil‑rights advocates celebrated the ruling as a victory for privacy and due process.

The injunction also has broader implications for the relationship between federal tax agencies and immigration enforcement. It signals that the federal government must adhere to strict statutory conditions before sharing taxpayer data with other agencies, a safeguard that has been a cornerstone of U.S. privacy law since the 1970s.

The IRS has yet to respond formally to the court’s order, but the ruling is expected to prompt a review of the agency’s internal procedures and could set a precedent for other agencies that seek to obtain taxpayer information.

As the court’s decision takes effect, the IRS will be required to halt all further transfers of taxpayer addresses to ICE, effectively curtailing one of the administration’s key tools in the enforcement of immigration law. The case remains a stark reminder that even in the pursuit of national security, federal agencies must respect the privacy rights enshrined in the law.