A US federal appeals court has upheld an injunction preventing the Internal Revenue Service (IRS) from sharing taxpayers’ personal information, including addresses, with immigration authorities as part of the Trump administration’s deportation efforts.
The US Court of Appeals for the District of Columbia Circuit ruled on Tuesday that the IRS acted unlawfully when it disclosed taxpayer information in response to requests from Immigration and Customs Enforcement (ICE).
The court said ICE had sought the last known addresses of about 1.28 million people suspected of being in the US illegally, but the IRS failed to ensure that the requests satisfied the “stringent conditions” imposed by federal tax-confidentiality law.
The law, adopted in the aftermath of the Watergate scandal, generally restricts the IRS from sharing tax-return information with other federal agencies.
Under a policy adopted by the IRS last year, ICE was allowed to obtain taxpayer information to assist President Donald Trump’s mass deportation programme. The policy prompted legal challenges over whether the information-sharing arrangement complied with federal law.
By the time a lower court blocked the policy, the IRS had already provided ICE with 47,289 taxpayer records.
The Trump administration appealed the lower court’s decision, arguing that the injunction was interfering with federal law enforcement efforts.
However, US Circuit Judge Cornelia Pillard rejected that argument in Tuesday’s ruling.
“But that’s a gripe with Congress, not the court,” Pillard said.
The appeals court found several problems with the procedures used by the IRS to process ICE’s requests.
Pillard said the agency had failed to require ICE to provide an actual taxpayer address, despite the requirement under federal law.
“The IRS failed to require ICE to provide a ‘specific reason’ why the requested return information ‘is or may be relevant to [a qualifying] proceeding or investigation,’ as the statute demands,” Pillard wrote.
She also criticised the lack of individual oversight of the requests.
“It entirely fails to ensure that ICE lists a federal employee, let alone one ‘personally and directly engaged’ in a qualifying investigation of a particular taxpayer,” Pillard continued.
“That failure has serious consequences. When ICE requested information on 1.28 million taxpayers in the summer of 2025, ICE identified the same person as the point of contact for every single request.”
According to the judge, the system allowed millions of records to be processed automatically without adequate checks to establish whether individual requests met the legal requirements.
The practice “automates the review of millions of records without any individual review or any other means of ensuring compliance with the legal prerequisites to releasing each individual taxpayer’s information,” Pillard added.
The three-judge panel also concluded that the information-sharing arrangement violated privacy protections.
“The Data-Exchange Procedure reduces noncitizens’ privacy rights in their tax returns. By providing a distinct, automated pathway for ICE to request noncitizens’ information, the Data-Exchange Procedure deprives noncitizens of the protections that section 6103 guarantees to all taxpayers,” the court found.
The ruling leaves the injunction blocking the IRS from using the disputed procedure in place.
The Department of Homeland Security disagreed with the court’s decision and said the administration would continue pursuing immigration enforcement through legal means.
A DHS spokesperson told Reuters that the department “will continue using every lawful tool available to locate and remove illegal aliens with final orders of removal.”
