Appeals court rules IRS violated law by sharing taxpayer data with ICE

Ruling leaves block on further disclosures in place

The U.S. Circuit Court of Appeals for the District of Columbia ruled Tuesday that the Trump administration violated federal law when the Internal Revenue Service shared confidential taxpayer information with Immigration and Customs Enforcement. A unanimous three-judge panel left in place a lower-court block on further data sharing and identified two procedural defects in the cross-agency procedure.

The court’s opinion disclosed that ICE submitted more than one million names to the IRS through a request procedure the two agencies established, and the IRS turned over more than 47,000 taxpayer records in response, according to the ruling. The panel found two flaws in how the procedure was implemented.

First, the law requires information-sharing requests to include a name and address, but in some cases the IRS transferred taxpayer records in response to submissions using only partial or incomplete addresses, the court found. Second, the IRS provided a last known address for taxpayers rather than a date tied to the post-removal-order period that the statute makes relevant to a criminal investigation. That approach “systematically will cause IRS to continue to ignore that statutory requirement,” the panel ruled.

“The IRS is now on notice twice over regarding the legal inadequacies of its summer 2025 disclosures,” Judge Cornelia Pillard wrote for the panel in the case brought by a taxpayer-rights group. “The government and its personnel face steep civil and criminal consequences for willful disclosure of information.”

The ruling left the lower-court block on further data sharing in place. An IRS spokesman did not immediately respond to a request for comment on Tuesday.

The federal tax code creates broad protections for taxpayer information, with limited exceptions when IRS employees disclose data outside the agency. Tax records include information provided by individuals in the country without legal status, a population the government had for many years encouraged to file returns and be compliant with the tax law, assuring them that the data would not be shared with immigration authorities.

According to the court’s account, Trump administration officials sought to use the government’s trove of tax data for immigration enforcement after taking office. They met resistance from the IRS when they first requested records early in the administration, and broad requests were rejected. The administration eventually focused on a statutory exception requiring tax authorities to provide information to federal agencies conducting criminal inquiries, including investigations into individuals who failed to follow final orders of removal from the United States.

The IRS-ICE procedure that followed allowed immigration officials to submit lists of names to be checked against IRS records, producing the transfers the appeals court found unlawful.

The D.C. Circuit’s decision marks the second time in this litigation that a federal court has found the IRS disclosures unlawful.