IRS Shared 47,000 Taxpayer Records With ICE. Appeals Court Says It Broke Federal Law

A federal appeals court ruled Tuesday that the Internal Revenue Service broke federal law when it shared more than 47,000 taxpayer records with Immigration and Customs Enforcement under a Trump administration data-sharing system.

The unanimous U.S. Court of Appeals for the District of Columbia Circuit upheld an order blocking the IRS procedure while the lawsuit continues. The agency must also notify the federal judge overseeing the case before responding to future Department of Homeland Security requests for taxpayer information.

ICE sought the last known addresses of 1.28 million people in 2025 as part of investigations involving immigrants with final removal orders. Before the system was halted, the IRS disclosed 47,289 records.

The case, Center for Taxpayer Rights v. IRS, centers on federal protections that generally keep tax returns and related information confidential. Federal agencies can obtain limited IRS information for certain criminal investigations, but only when specific legal requirements are met.

The appeals court found that the IRS system used for ICE requests did not reliably enforce those safeguards.

Under the procedure, ICE could satisfy an address field by entering five or nine digits. The numbers did not have to be a valid ZIP code, and ICE could leave out a street address, city, and state.

ICE could also submit a Social Security number or Individual Taxpayer Identification Number. If the number matched an IRS record, the agency could return the person's most recent address even when ICE had not supplied a complete address.

More than 90 percent of the records released to ICE were produced through that identification-number matching process, according to the court.

The system also required little verification of the ICE official requesting the information. ICE identified the same person as the contact for requests involving all 1.28 million taxpayers, which the district court found implausible for that many separate criminal investigations.

The Trump administration argued that ICE was investigating people suspected of willfully remaining in the United States after receiving final removal orders and that federal tax law allowed the disclosures.

The D.C. Circuit had previously allowed the IRS and DHS agreement itself to remain in place because its terms required compliance with federal tax privacy law. The latest case focused on how the agreement was actually carried out.

U.S. District Judge Colleen Kollar-Kotelly blocked the IRS procedure in November 2025 after finding that the groups challenging it were likely to show the agency had acted unlawfully.

Writing for the three-judge appeals panel, U.S. Circuit Judge Cornelia Pillard also rejected the government's argument that requiring advance notice before future disclosures would interfere with criminal investigations.

The IRS called the requirement "highly unusual and harmful." Pillard called that argument "weak sauce," noting that the government can submit the notice under seal and keep investigative details from the public.

The appeals court also warned that future violations could bring additional consequences. Pillard wrote that the IRS is now "on notice twice over" about problems with the 2025 system and pointed to civil and criminal penalties for knowingly releasing protected taxpayer information in violation of federal law.

The Department of Homeland Security said it disagreed with the ruling and would continue using lawful methods to locate and remove people with final removal orders.

The injunction remains in place as the lawsuit proceeds.