Appeals Court Upholds Injunction Against IRS Sharing Taxpayer Data with ICE

<p>A federal appeals court on September 8, 2026, upheld an injunction blocking 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 were unlawful.</p><p>The court found that the IRS had 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 outlined 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 shared approximately 47,000 taxpayer addresses with ICE as part of a policy aimed at supporting the Trump administration's mass deportation efforts. This policy led to lawsuits alleging unlawful practices.</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 indicated that the IRS procedures violated federal law in multiple ways, particularly by not requiring ICE to provide an actual taxpayer address, as mandated by law. She noted that the IRS failed to require ICE to provide a 'specific reason' for the requested return information's relevance to a qualifying investigation.</p><p>The judge highlighted that the practice automated the review of millions of records without individual assessments, raising compliance concerns regarding the legal prerequisites for releasing taxpayer information. The three-judge panel also determined that the information-sharing practice would violate privacy laws.</p><p>The court found that the Data-Exchange Procedure diminished noncitizens’ privacy rights in their tax returns by creating an automated pathway for ICE to request information, thereby depriving noncitizens of the protections guaranteed to all taxpayers under section 6103.</p><p>A spokesperson for the Department of Homeland Security stated to Reuters that the agency disagrees with the ruling and will continue to utilize lawful tools to locate and remove individuals with final orders of removal.</p><p><i>Reuters contributed to this report.</i></p>