A U.S. federal appeals court has upheld a ruling blocking the Internal Revenue Service (IRS) from sharing confidential taxpayer information with U.S. Immigration and Customs Enforcement (ICE) under a data-sharing program introduced as part of the Trump administration’s immigration enforcement efforts.
The U.S. Court of Appeals for the District of Columbia Circuit ruled on September 8 that the existing IRS-ICE data-sharing process failed to comply with federal laws governing the confidentiality of tax records.
IRS Shared 47,289 Records With ICE
According to court records, ICE submitted requests to the IRS seeking information that could help locate people suspected of being unlawfully present in the United States.
The requests involved as many as 1.28 million individuals, with ICE seeking access to taxpayers’ last known addresses.
Before the program was halted by the courts, the IRS had already disclosed 47,289 records to immigration authorities.
The scale of the requests became a central issue in the legal challenge, raising questions about whether confidential tax information could effectively become part of the federal government’s immigration enforcement infrastructure.
Court Says Legal Requirements Were Not Met
Federal law provides strong protections for taxpayer information and generally prohibits the IRS from disclosing tax-return data to other government agencies unless specific legal requirements are satisfied.
The appeals court concluded that the procedure used for the IRS-ICE exchanges did not adequately meet those requirements.
Court documents showed that the system could process requests even when ICE had not provided a complete and valid address. Some requests reportedly contained entries such as “Unknown Address” or “Failed to Provide,” yet could still result in taxpayer information being disclosed.
Millions of Records Were Processed Through Automated System
The court also raised concerns about the scale and automated nature of the program.
Judge Cornelia Pillard, writing for the three-judge panel, said the system processed large numbers of records without sufficient safeguards to ensure that each disclosure complied with federal law.
The appeals court's decision was unanimous.
The ruling effectively leaves in place the lower court order preventing the government from continuing the existing data-sharing procedure.
Taxpayer Privacy Protections Date Back to Watergate Era
The dispute also highlights the unusually strong confidentiality protections surrounding U.S. tax records.
Congress strengthened federal taxpayer privacy laws following abuses uncovered during the Watergate era, sharply limiting the circumstances in which information held by the IRS can be disclosed to other government agencies.
As a result, taxpayer information is generally confidential, with disclosure permitted only under specific exceptions established by Congress.
The appeals court found that the IRS-ICE program, as implemented, failed to remain within those statutory limits.
Trump Administration Challenged the Restrictions
The Trump administration had challenged the lower court's decision, arguing that the restrictions interfered with federal immigration enforcement efforts.
The appeals court rejected the government's attempt to revive the existing program, emphasizing that agencies must operate within the disclosure rules established by Congress.
The Department of Homeland Security (DHS), which oversees ICE, disagreed with the decision and maintained that the administration would continue using lawful tools available to locate and remove individuals subject to deportation.
Ruling Does Not Ban All IRS-ICE Information Sharing
Importantly, the ruling does not establish an absolute ban on every possible exchange of information between the IRS and ICE.
Instead, the court determined that the data-sharing procedure being used did not satisfy federal legal requirements.
That distinction means ICE could potentially obtain taxpayer information in circumstances specifically authorized by law and when all required safeguards are followed.
The decision nevertheless represents a significant setback for efforts to use federal tax records on a large scale as part of immigration enforcement and could have broader implications for how government agencies share sensitive personal data in future immigration operations.
