A federal appeals court ruled the Internal Revenue Service violated taxpayer privacy laws by sharing personal information with Immigration and Customs Enforcement, blocking a Trump administration policy that provided ICE with addresses of 1.28 million suspected illegal immigrants without proper legal safeguards.
Court Finds IRS Violated Watergate-Era Privacy Protections
The U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court injunction against the IRS data-sharing program on Tuesday. Judge Cornelia Pillard ruled the agency failed to enforce stringent conditions required under federal tax-confidentiality laws enacted after the Watergate scandal. These laws generally prohibit the IRS from sharing tax return information with other federal agencies without meeting specific legal requirements.
The IRS shared approximately 47,000 taxpayer addresses with ICE last year under a policy designed to support mass deportation efforts. By the time a district court judge blocked the practice, the agency had already transmitted 47,289 taxpayer records to immigration authorities. The administration appealed, arguing the injunction hampered federal law enforcement operations.
Automated System Bypassed Individual Review Requirements
Judge Pillard identified multiple violations in the IRS procedures. The agency failed to require ICE agents to provide actual taxpayer addresses or specific reasons why requested information was relevant to qualifying investigations. Most seriously, ICE identified the same person as the point of contact for all 1.28 million records requested in summer 2025, automating reviews without ensuring individual compliance with legal prerequisites for releasing taxpayer data.
The three-judge panel determined the automated data exchange deprived noncitizens of privacy protections that federal law guarantees to all taxpayers. The court found the IRS created a distinct pathway for ICE requests that circumvented safeguards built into Section 6103 of the tax code, which protects confidential taxpayer information from unauthorized disclosure.
Privacy Rights Versus Enforcement Authority
The Department of Homeland Security expressed disagreement with the ruling. A spokesperson told Reuters the agency will continue using every lawful tool available to locate and remove illegal aliens with final removal orders. The administration had argued that access to taxpayer addresses was necessary for immigration enforcement operations.
The decision reinforces post-Watergate privacy protections that require federal agencies to meet strict criteria before accessing confidential tax information. The court rejected the administration’s position that efficiency concerns justify bypassing individual review requirements, stating that complaints about enforcement difficulties should be directed at Congress rather than the judiciary.