A unanimous three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit on September 8 upheld a lower-court ruling that blocked the Internal Revenue Service (IRS) from sharing taxpayer address data with Immigration and Customs Enforcement (ICE). The appeals court found that the IRS policy ‘indisputably contravened’ federal tax confidentiality laws, specifically Section 6103, which governs the disclosure of taxpayer information.
The ruling prevents the IRS from continuing a data-sharing agreement with ICE that had already resulted in 47,289 taxpayer records being disclosed. The policy, formalized in an April 2025 memorandum of understanding, allowed ICE to request the last known addresses of more than 1 million people believed to be in the U.S. illegally. The court’s decision marks the second major legal setback for the Trump administration in recent days regarding federal data-sharing programs tied to immigration enforcement.
Court Rejects Government Arguments
The appeals court rejected arguments from government lawyers who contended that the plaintiff organizations lacked legal standing and that the IRS was not required to follow Administrative Procedure Act procedures because the agreement was not a final agency action. Circuit Judge Cornelia Pillard, writing for the panel, stated that at least one plaintiff organization demonstrated sufficient injury under the law.
The court’s decision aligns with a February 2025 district court ruling that initially stayed the IRS-ICE data-sharing process. The appeals panel agreed that the IRS failed to meet the legal requirements for disclosing taxpayer information, including the need for ICE to specify individual taxpayer names, addresses, relevant tax periods, and the relevance of the information to a criminal investigation.
Policy Background and Legal Framework
Under Section 6103, the IRS may share tax return information with other federal agencies only for criminal investigations, and such requests must meet strict criteria. The IRS-ICE agreement, however, allowed for bulk requests without individual taxpayer identification in some cases. The court found that this approach violated the law’s procedural safeguards.
The Center for Taxpayer Rights (CTR), which brought the lawsuit, hailed the ruling as a victory for taxpayer confidentiality. A spokesperson stated that the decision reaffirmed that ‘Treasury and the IRS can’t do end runs around carefully crafted statutory exceptions to confidentiality.’
Broader Implications and Related Legal Battles
The court’s ruling comes amid a series of legal challenges to federal data-sharing programs ahead of the November midterm elections. In a separate but related case, the same appeals court declined to pause a ruling against the administration’s expanded SAVE citizenship-verification system, which is central to ongoing disputes over voter-roll maintenance and citizenship checks.
The practical impact of these decisions may be most pronounced in states that sought to use federal databases to verify voter citizenship before the elections. Legal experts suggest the rulings could set a precedent for how federal agencies handle taxpayer data in immigration and election-related enforcement.
Government Response and Ongoing Litigation
The IRS and Department of Homeland Security (DHS) have not yet publicly responded to the ruling. The White House and the League of Women Voters, which has been involved in related litigation, did not immediately provide comment. The case is expected to proceed to further legal review, with potential implications for future IRS-ICE data-sharing policies.