A federal appeals court has affirmed a preliminary injunction blocking an IRS policy that disclosed thousands of taxpayers’ addresses to immigration authorities, agreeing the agency’s automated process likely violated the strict confidentiality protections Congress built into the Tax Code. (Center for Taxpayer Rights v. IRS, 2026 WL 2635380, 9/8/2026)
The District of Columbia U.S. Circuit Court of Appeals unanimously upheld an order halting the IRS’ “Data-Exchange Procedure,” the automated system it built to answer U.S. Immigration and Customs Enforcement (ICE) requests for the last known addresses of people ICE suspects of residing in the country unlawfully. By the time the district court intervened, the IRS had turned over 47,289 records to ICE.
The Congressional Hispanic Caucus, which led an amicus brief signed by 115 members of Congress, called the ruling a decisive victory. “Today the court affirmed what we have argued from the very beginning: no administration is above the law, and paying your taxes does not mean surrendering your right to privacy,” said Representative Adriano Espaillat (D-NY), the caucus chair.
Writing for the panel, Circuit Judge Cornelia Pillard concluded the plaintiffs are likely to succeed in showing the procedure “indisputably contravenes the requirements of section 6103,” the post-Watergate statute that makes returns and return information confidential.
How the data-sharing procedure worked
Under IRC § 6103(i)(2), the IRS can disclose return information for certain non-tax criminal investigations only if the requesting agency supplies the taxpayer’s name and address and a specific reason the information is relevant. The Data-Exchange Procedure, the court found, checked only whether ICE placed some five- or nine-digit number in the address field — a number that did not have to be a real ZIP code.
More than 90% of the 47,289 disclosures ran through an automated “TIN Matching” method that paired a name and taxpayer identification number, then returned the IRS’ last known address without confirming the address ICE listed was accurate or even valid. Quoting the district court, the panel noted that “ICE could have submitted a request with an ‘address’ like, ‘Don’t Care 12345,’ or, ‘00000,’ and still received a taxpayer’s address.”
The admission came in a supplemental declaration from the IRS’ chief risk and control officer, filed during the appeal, which conceded the agency released addresses even when ICE’s requests were “either incomplete or insufficiently populated” — including some that listed the address as “Unknown Address” or “Failed to Provide.”
One officer, 1.28 million requests
The opinion also faulted the procedure for ignoring § 6103(i)(2)’s command that information go only to officers “personally and directly engaged” in a qualifying investigation. The system required only that ICE’s point-of-contact field not be empty, and ICE named the same official as the contact for all 1.28 million individuals in its June 2025 request. The district court called it facially implausible “that a single individual could be ‘personally and directly engaged’ in approximately 47,000 criminal matters,” let alone 1.28 million.
The panel rejected the government’s theory that one officer could screen the cases by checking whether each person remained in the country after a removal order, noting that the IRS attaches no date to the address it supplies, so the address cannot show current presence.
The district court found that the single-official claim, set against the government’s acknowledgment that ICE sought the data for the administration’s mass-deportation agenda, “raises an inference” that ICE’s claim of criminal investigations “was pretext.”
The panel found a further breach of § 6103(i)(2), which demands a “specific reason” the data is relevant. ICE’s cover letter said only that the addresses were “potentially at issue” in investigating the 90-day removal offense — reasoning the panel said “beggars belief.”
Court rejects ‘no policy’ and ‘weak sauce’ defenses
Central to the ruling was how far the system strayed from the agency’s past approach. Before 2025, the Internal Revenue Manual directed “Disclosure Managers” to handle requests individually and to weigh less intrusive options, such as offering a transcript instead of a return. The new procedure, the court said, is a “far cry” from that regime. That shift amounted to reviewable final agency action, the panel held, rejecting the government’s claim that it had adopted no reviewable policy — a position undercut when IRS counsel acknowledged at oral argument that the transfers were “concededly unlawful.”
The government argued the injunction was “highly unusual and harmful” because it required advance notice before future disclosures. The court called that “weak sauce,” noting any notice can be filed under seal. “The government has no legitimate interest in conducting criminal investigations in violation of the statute,” Pillard wrote, adding that the IRS is “now on notice twice over” and that its personnel face steep civil and criminal penalties for willful violations.
The case was brought by the Center for Taxpayer Rights, Main Street Alliance, and two labor unions, represented by Democracy Forward. For now, the prohibition on IRS-ICE data sharing remains in place as the litigation continues.
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