Court Blocks IRS-ICE Data Sharing Procedure Over Taxpayer Privacy Rules
A federal appeals court has blocked an IRS procedure for sharing taxpayer information with Immigration and Customs Enforcement (ICE), finding that the process likely violated federal tax privacy law.
The ruling from the U.S. Court of Appeals for the D.C. Circuit does not mean the IRS can never share taxpayer information with ICE—or with another federal agency. Federal law permits certain disclosures in limited circumstances. But the court made clear that those exceptions come with rules, and, according to the court, the IRS did not follow them. That matters because taxpayer information is generally confidential under section 6103 of the tax code.
The law protects not only copies of tax returns but also “return information,” which can include whether a return was filed, income information, filing status, and even a taxpayer’s address.
Tax Information Is Generally Confidential
The specific part of the tax code that protects your taxpayer information is found in section 6103.
There are exceptions to the rule. For example, the IRS may share information with state tax agencies, the Social Security Administration, and law enforcement in certain circumstances.
And, under section 6103(i)(2), the IRS may provide limited return information to federal officers and employees for use in certain nontax criminal investigations. But it’s not carte blanche to open records. The requesting agency must provide specified identifying information, including the taxpayer’s name and address, and the information may be disclosed only to officers or employees who are personally and directly engaged in the investigation.
That’s not what the court says happened here.
How The IRS-ICE Arrangement Worked
The IRS entered into a data-sharing agreement with the Department of Homeland Security, which oversees ICE. Under the agreement, ICE could ask the IRS for limited information, including last-known addresses, in connection with certain criminal investigations. The IRS relied on section 6103(i)(2) as authority for the disclosures.
ICE sought information relating to more than 1.2 million records. The IRS ultimately disclosed last-known address information for approximately 47,000 people after matching ICE-provided data against IRS records. More than 90% of the disclosures ran through an automated “TIN Matching” method that paired a name and taxpayer identification number, then returned the last known address without confirming the address ICE listed was accurate or even valid.
Earlier this year, the Treasury Inspector General for Tax Administration (TIGTA) examined how the IRS carried out the arrangement. TIGTA concluded that the system did not identify and match records accurately and consistently. For example, TIGTA found that the IRS process could allow entries such as “00000” or “99999,” or other obviously invalid data, to pass the initial screening. The IRS later acknowledged that it may have provided last-known addresses in some cases where ICE had supplied incomplete or insufficient address information. Some requests that should have been rejected may have passed through, while other possible matches could fail because of formatting differences.
The Address Problem
The court looked at that same problem. While one statutory requirement is that the requesting agency provide the taxpayer’s address, the IRS procedure did not verify that an address had been supplied. Instead, the court said the system treated the requirement as satisfied if the address field contained a five- or nine-digit number—and that number did not even have to be a valid ZIP code. And ICE did not necessarily have to provide a street name, city, state, or other meaningful address information.
As a result, the IRS disclosed taxpayer records in response to requests listing addresses such as “Unknown Address,” “Failed to Provide,” and “NA NA,” as well as partial addresses lacking basic information. That is a significant problem because, in many instances, ICE asked the IRS to provide the very address it had not supplied but was required by statute to provide. The court concluded that the plaintiffs were likely to succeed in showing that the procedure was inconsistent with section 6103.
Who Was Actually Conducting The Investigation?
Under section 6103, taxpayer information may be disclosed only to officers or employees who are personally and directly engaged in the qualifying criminal investigation.
The IRS procedure required ICE to populate a point-of-contact field. But, again, the process checked largely whether something had been entered, not whether the person identified actually satisfied the statute. According to the appellate record, ICE identified the same individual as the point of contact for all of the requests. That raised an obvious question: could one person really be personally and directly engaged in that many separate criminal investigations?
The district court found it facially implausible “that a single individual could be ‘personally and directly engaged’ in approximately 47,000 criminal matters,” let alone 1.28 million.
Why Congress Made The Rules So Strict
Here’s why all of this matters. Before 1976, the executive branch had considerably more control over access to tax returns and taxpayer information. But the Nixon administration famously sought to use the IRS as a political or investigative weapon, which raised concerns about how tax records should be used.
In response, Congress made tax returns and return information confidential unless a specific statutory exception applies. Today, other federal agencies do not get access to IRS data simply because the information would be useful. A statutory exception must apply, and its conditions must be met.
That makes sense because the IRS knows an extraordinary amount about taxpayers. A return can reveal where you work, how much you earn, whether you have children, whether you save for retirement, your investments, your business interests, charitable contributions, medical expenses, foreign accounts, and other sensitive financial details.
And, of course, our federal tax system depends heavily on voluntary compliance. When we file our tax returns, we turn over significant amounts of private information to the government. The government cannot simply repurpose that information whenever another agency finds it useful.
What The Court Ruled
Circuit Judge Cornelia Pillard wrote that the automated procedure, as implemented, “indisputably contravenes” statutory requirements. The D.C. Circuit affirmed a preliminary injunction blocking the data exchange.
The Center for Taxpayer Rights, Main Street Alliance, and two labor unions brought the case, represented by Democracy Forward. The court has not entered a final judgment. Instead, it concluded that the plaintiffs are likely to succeed on the merits and blocked the procedure while the case, Center for Taxpayer Rights v. Internal Revenue Service, No. 26-5006 (D.C. Cir. Sept. 8, 2026), continues.
Why It Matters
The ruling does not prevent all disclosures of taxpayer information to ICE. Section 6103 still permits qualifying disclosures for certain criminal investigations.
What the IRS cannot do, at least under the current injunction, is use a procedure that does not ensure it actually satisfies those statutory requirements. That may sound technical. But when the information at issue comes from tax returns, the rules are supposed to be technical to protect your privacy.
