A federal appeals court has upheld a lower court ruling preventing the IRS from providing taxpayer information to Immigration and Customs Enforcement.
The three-judge D.C. Circuit panel’s unanimous ruling on Tuesday reaffirms a U.S. District Court judge’s decision last November that blocked the data-sharing deal between the two agencies.
“After the Watergate scandal exposed executive branch abuses of U.S. taxpayers’ information to harass the Administration’s enemies, Congress enacted a prohibition against the Internal Revenue Service (IRS) sharing tax return information with any other federal agency unless the requesting agency meets stringent conditions. In response to requests from Immigration and Customs Enforcement (ICE), in the summer of 2025, the IRS developed a specialized procedure for disclosing return information. The procedure failed to ensure that ICE’s requests complied with statutory requirements. The IRS nonetheless began using the procedure to disclose tens of thousands of records,” Judge Cornelia Pillard wrote on behalf of the U.S. Court of Appeals for the D.C. Circuit.
“Several groups sued. The IRS had turned over more than 47,000 records by the time the district court stayed the IRS from using the new procedure and preliminarily enjoined further disclosures without notice to the court. We affirm.”
Last February, U.S. District Judge Colleen Kollar-Kotelly of the District of Columbia wrote in a ruling that the IRS broke the law “approximately 42,695 times” when it shared confidential taxpayer addresses with ICE. ICE asked the IRS for 1.28 million taxpayer records in summer 2025 under a memorandum of understanding, and a ruling on the legality of the disclosure had been appealed.
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Federal law requires that before the IRS hands over a taxpayer’s address, a requesting agency must first provide the IRS with the name and address of the person it’s looking for. The requirement exists to ensure that the government can access confidential tax records only for individuals it has already specifically identified.
Kollar-Kotelly ruled that the Department of Homeland Security, which oversees ICE, didn’t follow this law.
Section 6103(i)(2) of the Internal Revenue Code requires a requesting agency to provide the address of the taxpayer whose information it’s seeking, but the IRS’s data exchange procedure doesn’t require ICE to do so, the court highlighted, as reported by Tax Notes. Instead, it noted that the data exchange procedure requires only that the request contain a five- or nine-digit number in the address field.
In November 2025, Kollar-Kotelly granted a preliminary injunction that taxpayer and labor groups sought in response to DHS accessing data on large numbers of Americans. She further stayed the agreement signed between the IRS and ICE that allowed information sharing, Bloomberg Tax reported.
The Center for Taxpayer Rights sued the IRS last year, following a data-sharing agreement signed in April 2025 by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem that granted ICE permission to submit names and addresses of immigrants inside the U.S. illegally to the IRS for cross-verification against tax records.
The Treasury Department said at the time that the agreement will help carry out President Donald Trump’s agenda to secure U.S. borders and is part of his larger nationwide immigration crackdown, which has resulted in deportations and workplace raids.
Immigrant advocates said the IRS-DHS information-sharing agreement violates privacy laws and diminishes the privacy of all Americans.
Melanie Krause, the acting IRS commissioner when the agreement was signed, resigned in protest.
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The Washington Post first reported the data disclosure at the center of this case, citing three people familiar with the matter who said it appeared to breach legal safeguards protecting taxpayer data and was only recently discovered.
The IRS later confirmed the Post’s reporting in a court filing earlier in February, when agency chief risk and control officer Dottie Romo stated in a sworn declaration that the IRS shared confidential taxpayer information even when the DHS lacked sufficient data to identify specific people positively.
“The IRS is now on notice twice over regarding the legal inadequacies of its summer 2025 disclosures. The government and its personnel face steep civil and criminal consequences for willful disclosure of information in violation of section 6103,” Pillard said on Tuesday. “As this court has already cautioned, ‘we expect that, going forward, [the] IRS will adhere to the representations made before this court regarding the address requirement,’ and we stress that the same applies to the other requirements of section 6103.”
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