The IRS broke a Watergate-era privacy law when it gave information on 47,000 people to ICE for use in immigration enforcement, a federal appeals court ruled Tuesday.
The IRS took a process for turning over individualized information when requested for a specific criminal investigation and turned it into a “mass” data-sharing operation with U.S. Immigration and Customs Enforcement, the Circuit Court of Appeals for the District of Columbia said.
In a unanimous ruling, the three-judge panel upheld a district court injunction halting the sharing, agreeing that it trampled on Section 6103 of the Internal Revenue Code, which limits when and how the IRS can disclose the data it collects on taxpayers.
“The Data-Exchange Procedure indisputably contravenes the requirements of section 6103,” wrote Judge Cornelia Pillard, an Obama appointee. She was joined by two other Obama-appointed judges in the ruling.
She said the IRS is “now on notice” to avoid any more illegal disclosures.
Harnessing the IRS for immigration enforcement has long been a goal of conservatives, who point out that the agency is collecting taxes from illegal immigrants and, in many cases, has information on them that other agencies don’t.
Last year, ICE sought to get at that data, saying it wanted to get IRS information on 1.28 million migrants who were defying deportation orders. The IRS began processing the requests and returned information on more than 47,000 people before the lower court stepped in and shut things down.
The appeals court said the transaction violated several principles of IRS privacy rules.
The tax agency is supposed to release data only when the requesting agency provides a valid name and address for the target. But in more than 90% of the cases, the IRS merely matched taxpayer identification numbers and didn’t bother to verify the name and address.
IRS rules also require that the information only be shared with people at the requesting agency who are “directly” engaged in the criminal proceeding. The IRS was turning over the information without validating that fact, the appeals court said.
“When ICE requested information on 1.28 million taxpayers in the summer of 2025, ICE identified the same person as the point of contact for every single request,” Judge Pillard wrote.
She also said the IRS didn’t demand a specific reason the information was needed in each case, instead submitting them all under the same general justification of a violation of the law against staying after a deportation order.
The legal challenge was led by the Center for Taxpayer Rights.
The Trump administration had argued in court that the ICE-IRS agreement was beyond judges’ review. But it admitted to releasing the information without valid address checks.
The court concluded that it did have jurisdiction over the data sharing.
Government lawyers also objected to the district court’s demand that the IRS report any new requests for information, saying that could jeopardize investigations.
Judge Pillard called that “weak sauce.” She said the IRS can file its notices in private so they aren’t part of the public docket.
Contact the author
Please read our comment policy before commenting.