Appeals Court Upholds Injunction Against IRS Sharing Taxpayer Data with ICE

<p>A federal appeals court on September 8, 2026, upheld an injunction that prevents the Internal Revenue Service (IRS) from sharing personal information, including taxpayer addresses, with Immigration and Customs Enforcement (ICE). The U.S. Court of Appeals for the District of Columbia Circuit ruled that the IRS's actions under the Trump administration's policy were unlawful.</p><p>The court found that the IRS unlawfully disclosed taxpayer information in response to ICE's request for the last known addresses of 1.28 million suspected illegal migrants. The ruling stated that the IRS did not ensure that ICE's requests complied with the stringent conditions set forth in a federal tax-confidentiality law established after the Watergate scandal, which generally prohibits the IRS from sharing tax-return information with other federal agencies.</p><p>In the previous year, the IRS had shared approximately 47,000 taxpayer addresses with ICE as part of a policy intended to support the Trump administration's mass deportation efforts. This policy led to lawsuits alleging that the practice was illegal.</p><p>A lower-court judge had previously sided with the plaintiffs and blocked the policy, although by that time, the IRS had already shared 47,289 taxpayer records with ICE.</p><p>The administration appealed the ruling, claiming it impeded federal law enforcement. However, U.S. Circuit Judge Cornelia Pillard stated in the appeals court's ruling that the issue should be addressed by Congress, not the court.</p><p>Pillard noted that the IRS procedures violated federal law in multiple ways, particularly by failing to require ICE to provide an actual taxpayer address, as mandated by law. She emphasized that the IRS did not require ICE to specify why the requested return information was relevant to a qualifying investigation, as the statute requires.</p><p>Furthermore, Pillard pointed out that the IRS did not ensure that ICE designated a federal employee involved in the investigation of a specific taxpayer. This lack of oversight has significant implications, as evidenced by ICE's request for information on 1.28 million taxpayers, where the same individual was identified as the point of contact for all requests.</p><p>The court's three-judge panel also determined that the information-sharing practice would violate privacy laws. The ruling stated, "The Data-Exchange Procedure reduces noncitizens’ privacy rights in their tax returns. By providing a distinct, automated pathway for ICE to request noncitizens’ information, the Data-Exchange Procedure deprives noncitizens of the protections that section 6103 guarantees to all taxpayers."</p><p>A spokesperson for the Department of Homeland Security expressed disagreement with the ruling and stated that the department would continue to use lawful tools to locate and remove individuals with final orders of removal.</p>