Federal court blocks IRS data sharing with immigration authorities
A federal data-privacy law rooted in the Watergate era has emerged as a firm constraint on the Trump administration's mass deportation strategy. The U.S. Court of Appeals for the District of Columbia Circuit ruled on Tuesday that…
Key takeaways
- A federal appeals court, the D.C. Circuit, ruled on Tuesday that the IRS acted unlawfully when it shared taxpayer addresses with ICE, upholding a lower-court injunction blocking the practice.
- The court found the IRS violated a Watergate-era tax-confidentiality statute by not requiring ICE to give a specific reason each taxpayer's information was relevant and not tying requests to a personally engaged federal employee.
- ICE sought information on 1.28 million suspected illegal migrants in summer 2025 and listed the same individual as the point of contact for every request, automating review without individual scrutiny.
- Before the policy was first blocked, the IRS had already transferred 47,289 taxpayer records to ICE.
- The court held the data-exchange procedure unlawfully reduced noncitizens' tax-return privacy rights guaranteed to all taxpayers.
A federal data-privacy law rooted in the Watergate era has emerged as a firm constraint on the Trump administration's mass deportation strategy. The U.S. Court of Appeals for the District of Columbia Circuit ruled on Tuesday that the Internal Revenue Service acted unlawfully when it shared taxpayer addresses with Immigration and Customs Enforcement, upholding a lower-court injunction that blocks the practice.
The three-judge panel, with U.S. Circuit Judge Cornelia Pillard writing for the court, found the IRS violated a federal tax-confidentiality statute in several respects. The law, adopted in the aftermath of the Watergate scandal, generally bars the IRS from sharing tax-return information with other federal agencies unless stringent conditions are met. The IRS failed to require ICE to provide a specific reason why each taxpayer's information was relevant to a qualifying investigation, Pillard wrote, and failed to ensure that requests were tied to a federal employee personally and directly engaged in such an investigation.
The scale of the disclosure
The ruling's sharpest passage concerns the breadth of ICE's request. When ICE sought information on 1.28 million suspected illegal migrants in the summer of 2025, it identified the same individual as the point of contact for every single request. That, Judge Pillard wrote, automates the review of millions of records without any individual review and without any means of ensuring compliance with the legal conditions the statute requires. By the time a lower court first blocked the policy, the IRS had already transferred 47,289 taxpayer records to ICE.
The three-judge panel also ruled that the data-exchange procedure reduced noncitizens' privacy rights in their tax returns, creating a distinct automated pathway that deprived noncitizens of protections the tax-confidentiality law guarantees to all taxpayers.
The Trump administration had argued the injunction hindered federal law enforcement. Judge Pillard's reply was brief: that, she wrote, is a gripe with Congress, not the court. A Department of Homeland Security spokesperson told Reuters that DHS disagrees with the ruling and will continue using every lawful tool available to locate and remove illegal aliens with final orders of removal.
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