Court of Appeals for the District of Columbia Circuit upheld a lower-court order preventing the IRS from continuing a data-sharing arrangement with ICE that had already resulted in more than 47,000 taxpayer records being disclosed to immigration authorities. The court found that challengers were likely to succeed in arguing that the program violated federal tax confidentiality laws. In a statement to Newsweek, the Center for Taxpayer Rights (CTR), which brought the case, said the court upheld the "fundamental right to the confidentiality of taxpayer return information." "It made clear that Treasury and the IRS can’t do end runs around carefully crafted statutory exceptions to confidentiality just because it wants to or thinks it knows better," a spokesperson said.
"All US taxpayers should be relieved by the court’s order today." The decision comes days after the same appeals court declined to pause a separate ruling against the administration's expanded SAVE citizenship-verification system, which is at the center of a broader legal battle over voter-roll maintenance and citizenship checks ahead of this year's midterm elections. The practical impact of the two court cases may be felt most acutely in states that hoped to use expanded federal databases to verify voter citizenship before November's elections. Newsweek reached out to the White House, the Department of Homeland Security (DHS), the IRS, and the League of Women Voters for comment Tuesday afternoon.
The IRS case stems from a 2025 agreement between the tax agency and ICE under which immigration officials sought address information on people they said were under criminal investigation for failing to comply with final deportation orders. According to court filings, ICE requested information on roughly 1.28 million people. The IRS subsequently developed what it called a "Data-Exchange Procedure" for processing those requests.
The appeals court found that the process likely conflicted with Section 6103 of the Internal Revenue Code, a post-Watergate taxpayer privacy law that tightly restricts when tax information can be shared with other federal agencies. Among other findings, the court said that the IRS disclosed taxpayer information even when ICE requests lacked information required by statute. Judges noted that the system accepted requests where address fields contained entries such as "Unknown Address," "Failed to Provide" or "NA NA," despite federal law requiring agencies to provide the taxpayer's name and address before obtaining return information.
The court also found that more than 90 percent of the records disclosed to ICE were generated through a TIN-matching process that did not verify whether a valid address had been supplied. "The Data-Exchange Procedure indisputably contravenes the requirements of section 6103," Judge Cornelia Pillard wrote for the panel. The judges further noted that government attorneys acknowledged during oral arguments that some disclosures occurred "not in compliance with the statute." The ruling is significant because it limits one of the administration's efforts to use existing government databases to aid immigration enforcement.
The panel emphasized that taxpayer privacy protections were strengthened after Watergate amid concerns about executive branch misuse of sensitive information. The court also rejected government arguments that the IRS procedure was merely an internal operational process and therefore shielded from judicial review, holding instead that it constituted reviewable "final agency action" under the Administrative Procedure Act. For immigration advocates and taxpayer-rights groups, the decision represents a major victory.
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