Judges uphold an injunction blocking a Trump administration data-sharing policy after the IRS disclosed more than 47,000 taxpayer records to immigration authorities
WASHINGTON — A federal appeals court has ruled that the Internal Revenue Service unlawfully shared confidential taxpayer information with U.S. immigration authorities, dealing a significant legal setback to a Trump administration initiative designed to use tax records to help locate people targeted for immigration enforcement.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit on Tuesday upheld an injunction preventing the IRS from continuing a data-sharing procedure that judges concluded violated federal taxpayer-confidentiality law.
The case involved an unprecedented effort by U.S. Immigration and Customs Enforcement, or ICE, to obtain taxpayers’ last-known addresses from the IRS.
According to court records, ICE sought information concerning approximately 1.28 million people in 2025. The IRS ultimately identified and disclosed 47,289 taxpayer records to the immigration agency.
The decision, first reported Tuesday by Reuters, centers on a fundamental question with implications well beyond immigration policy: how far can the federal government go in using information Americans and immigrants provide to the IRS for purposes unrelated to collecting taxes?
A Massive Request for Taxpayer Addresses
The controversy began as the Trump administration intensified immigration enforcement during 2025.
In April of that year, the IRS and the Department of Homeland Security entered into a memorandum of understanding establishing procedures under which ICE could request certain taxpayer information for criminal investigations.
On June 27, 2025, then-acting ICE Director Todd Lyons submitted a request seeking the IRS’s last-known addresses for approximately 1.28 million individuals whom immigration authorities said could be connected to investigations involving failure to depart the United States following final removal orders.
The IRS began processing the requests in July.
By August 7, the agency had supplied ICE with more than 47,000 records, according to court documents.
The sheer scale of the operation became a central issue in the subsequent litigation.
Why Tax Information Is Normally Confidential
Federal law generally treats tax returns and related taxpayer information as confidential.
Those protections are contained primarily in Section 6103 of the Internal Revenue Code, a law enacted as part of post-Watergate reforms intended to prevent federal officials from freely using tax information for political, law-enforcement or other purposes unrelated to tax administration.
There are exceptions allowing the IRS to provide certain information to law-enforcement agencies under specified circumstances.
But those exceptions come with strict requirements.
The dispute was therefore not simply about whether ICE could ever receive information from the IRS. The central question was whether the government’s large-scale procedure complied with the conditions Congress established for such disclosures.
The appeals court concluded that it did not.
Court Finds Serious Problems With IRS Procedure
The appeals court found that the procedure developed by the IRS failed to ensure that ICE requests satisfied statutory requirements before confidential taxpayer information was released.
One of the most striking findings involved addresses ICE was required to provide when requesting information.
According to the court, the IRS’s automated procedure could accept requests even when ICE’s address field contained incomplete information or entries such as “Unknown Address,” “Failed to Provide” or “NA NA.”
In other instances, information was released when an address lacked a street name or number.
The procedure could effectively treat a five- or nine-digit entry in the address field as sufficient for processing, even when it did not constitute the taxpayer address contemplated by federal law.
The court said the process therefore failed to satisfy safeguards established by Congress.
One ICE Official Listed for 1.28 Million Cases
Another major concern involved the requirement that taxpayer information be disclosed only to federal personnel who are “personally and directly engaged” in the qualifying criminal investigation or proceeding.
When ICE submitted requests involving approximately 1.28 million taxpayers, it identified the same person as the point of contact for every request, according to the appeals court.
The lower court had found it implausible that one individual could be personally and directly involved in tens of thousands of criminal investigations, much less approximately 1.28 million of them.
That finding became part of a broader judicial concern that a law-enforcement exception intended for qualifying investigations was being adapted into a mechanism for large-scale immigration enforcement.
More Than 90% of Records Came Through Tax-ID Matching
The appeals court also examined how the IRS matched ICE’s requests against its own taxpayer database.
More than 90% of the 47,289 records disclosed were generated through a process involving taxpayer identification number matching, according to the court.
Under that method, judges found, the IRS did not necessarily verify that ICE had provided a valid taxpayer address before returning the taxpayer’s last-known address from IRS files.
The appeals court concluded that the procedure was not simply an internal interpretation of federal law. It had become an operational agency policy and had already been used to disclose tens of thousands of confidential records.
Judges Say Congress Set the Rules
The ruling carries significance because it addresses the separation between executive immigration policy and statutory privacy protections enacted by Congress.
The administration has broad authority to enforce immigration law, but the court’s decision makes clear that those enforcement priorities do not independently erase restrictions governing federal tax records.
The appeals court concluded that the IRS’s procedure conflicted with Section 6103 and therefore could not continue in its existing form.
The injunction upheld Tuesday prevents the agency from using the challenged procedure to make additional disclosures.
Lawsuit Challenged a Major Shift at the IRS
The litigation was brought by organizations including the Center for Taxpayer Rights and Main Street Alliance.
The plaintiffs argued that the IRS had departed from its traditional emphasis on protecting confidential tax information and replaced it with a system facilitating rapid, large-scale transfers between federal agencies.
A federal district judge had previously found that the challengers were substantially likely to establish that both the address-sharing policy and the resulting disclosures were unlawful.
The district court noted that the IRS had initially declined an ICE request because it did not satisfy the legal exception to taxpayer confidentiality. The agencies subsequently developed the memorandum of understanding and procedures that led to the August 2025 disclosure.
Why the Case Matters to Immigrant Communities
The controversy has particular significance for immigrant communities, including Haitians and other Caribbean immigrants living in the United States.
Millions of immigrants file federal tax returns, including some people without lawful immigration status who pay taxes using Individual Taxpayer Identification Numbers, or ITINs.
For years, immigrant advocates and tax professionals have emphasized that information supplied for tax purposes is protected by federal confidentiality rules.
Using IRS information for broad immigration enforcement could therefore have consequences beyond the people whose addresses are disclosed.
Critics have warned that immigrants could become reluctant to file tax returns if they believe information provided to the IRS could later be used to locate them for deportation.
That could undermine voluntary tax compliance, an issue that has also drawn concern from members of Congress.
The ruling does not mean the IRS can never disclose information to federal law-enforcement agencies. Federal law contains exceptions permitting certain disclosures when statutory requirements are satisfied.
Instead, the court found that the particular large-scale procedure adopted for ICE did not adequately enforce those requirements.
Administration Defends Immigration Enforcement
The IRS did not immediately respond to Reuters’ request for comment following Tuesday’s decision.
The Department of Homeland Security, which oversees ICE, has continued to defend the administration’s broader immigration-enforcement strategy and indicated that authorities would continue using lawful methods to locate people subject to removal.
The administration could seek further judicial review, but for now the injunction remains in effect.
A Major Privacy Ruling Beyond Immigration
Although the case grew out of the Trump administration’s immigration crackdown, its implications extend beyond immigration.
Taxpayer confidentiality rests partly on the principle that people should be able to provide sensitive financial information to the federal government without fearing that the information will routinely be repurposed for unrelated government objectives.
Congress strengthened those protections after Watergate amid concerns about political misuse of the IRS and confidential tax information.
Nearly half a century later, the dispute over ICE’s request for more than a million taxpayer addresses has placed those safeguards back at the center of a national debate.
The appeals court’s decision establishes an important boundary: immigration enforcement priorities do not allow federal agencies to bypass the confidentiality requirements Congress placed on taxpayer records.
For immigrant taxpayers in particular, the ruling may provide some reassurance that information submitted to comply with U.S. tax law remains subject to legal protections—even when another part of the federal government wants access to it.
The Haitian Tribune | U.S. News & Immigration
