Appeals Court Keeps IRS From Sharing Taxpayer Files with ICE

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit on Tuesday upheld an injunction that bars the Internal Revenue Service from sharing taxpayer addresses with Immigration and Customs Enforcement under a mass-request procedure adopted last year. The court said the arrangement violated Section 6103 of the Internal Revenue Code, the post-Watergate statute that generally forbids the IRS from disclosing return information except for specified criminal investigations that meet strict conditions. Judge Cornelia Pillard wrote that the agencies’ “Data-Exchange Procedure indisputably contravenes” those requirements. The administration argued the block hinders federal law enforcement. Pillard replied that is “a gripe with Congress, not the court.”

ICE asked the IRS in the summer of 2025 for last-known addresses of about 1.28 million people it identified as suspected of living in the United States illegally. Under an interagency agreement the IRS began matching those names and tax identification numbers and, by the time U.S. District Judge Colleen Kollar-Kotelly halted further transfers, had turned over 47,289 address records. More than 90 percent of those matches came through a TIN-matching process that did not confirm ICE had supplied a real taxpayer address. The procedure allowed ICE to put a five- or nine-digit number in the address field even when it was not a ZIP code. For the entire 1.28 million-name list, ICE listed the same employee as the point of contact. Section 6103(i)(2) requires the requesting agency to provide the taxpayer’s address and to name an officer “personally and directly engaged” in a qualifying investigation of that person. Pillard wrote the procedure “automates the review of millions of records without any individual review.” Kollar-Kotelly had found the IRS disclosed last-known addresses tens of thousands of times on insufficient requests. The D.C. Circuit left that injunction in place.

The plaintiffs — the Center for Taxpayer Rights, Main Street Alliance, and two labor unions — sued in Center for Taxpayer Rights v. IRS. The Center said the ruling upheld “the fundamental right to the confidentiality of taxpayer return information.” The panel that heard argument in May and decided the case Tuesday consisted of Judges Pillard, Patricia Millett, and Robert Wilkins, all appointed by President Barack Obama. The opinion is 32 pages. The court distinguished an earlier D.C. Circuit case, Centro de Trabajadores Unidos v. Bessent, in which a different panel allowed limited sharing to continue because it found no final agency action at that stage. This case, the judges said, involved an operational procedure that had already produced tens of thousands of disclosures. A separate First Circuit appeal of a Massachusetts injunction over the same April 2025 memorandum of understanding remains pending. The government has not announced whether it will seek rehearing or Supreme Court review of Tuesday’s decision. Until a higher court acts, the IRS may not use the mass Data-Exchange Procedure to send additional taxpayer addresses to ICE. Records already transferred are the subject of the existing district-court orders limiting further use.