A federal appeals court has upheld an injunction that prevents the Internal Revenue Service (IRS) from sharing taxpayer information, including addresses, with Immigration and Customs Enforcement (ICE). The U.S. Court of Appeals for the District of Columbia Circuit found that the Trump administration's policy to disclose this data to ICE was unlawful.
Violation of Tax Confidentiality Law
The court determined that the IRS failed to adhere to the strict conditions required by a federal tax-confidentiality law. This law, enacted after the Watergate scandal, generally prohibits the IRS from sharing tax-return information with other federal agencies. According to the ruling, the IRS did not ensure that ICE's requests met these stringent requirements.
In 2025, the IRS shared approximately 47,000 taxpayer addresses with ICE as part of an initiative aimed at supporting President Donald Trump's deportation agenda. This practice led to lawsuits alleging its illegality. A lower court had initially blocked the policy, though some data had already been shared.
The administration appealed this decision, arguing that the injunction hindered federal law enforcement efforts. However, U.S. Circuit Judge Cornelia Pillard stated that the issue was with Congress's legislation, not the court's interpretation.
Procedural Failures Cited
Judge Pillard highlighted several ways the IRS procedures violated federal law. Notably, the IRS did not require ICE to provide an actual taxpayer address, a mandate stipulated by the law. Furthermore, the IRS failed to ensure that ICE provided a "specific reason" why the requested return information was relevant to a qualifying proceeding or investigation. The court also pointed out that ICE identified the same individual as the point of contact for all 1.28 million taxpayer requests, undermining the requirement for a federal employee to be personally and directly engaged in a qualifying investigation of a particular taxpayer.
The ruling emphasized that this automated review process for millions of records lacked individual oversight, preventing compliance with legal prerequisites for releasing each taxpayer's information.
Privacy Concerns
In addition to the procedural violations, the three-judge panel ruled that the information sharing would infringe upon privacy laws. The court found that the data-exchange procedure reduced the privacy rights of noncitizens concerning their tax returns, establishing an automated pathway for ICE to request information that deprives individuals of the protections guaranteed by Section 6103 of the tax code to all taxpayers.
A Department of Homeland Security spokesperson stated that the department disagrees with the ruling and intends to continue using all lawful means to locate and remove individuals with final orders of removal.