Judge blocks IRS from sharing data with DHS for immigration enforcement

A federal judge on Friday blocked the Internal Revenue Service from sharing data with immigration enforcement officials, ruling that the tax agency violated federal law and the rights of tens of thousands of individuals in its attempt to participate in President Donald Trump’s mass deportation campaign.

The Treasury and Homeland Security departments in April formalized an agreement to share confidential information about taxpayers who the Trump administration suspected of being in the country illegally.

Under the terms of the deal, signed by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi L. Noem, immigration officials would provide the IRS with names, addresses and other identifying information for individuals they wished to detain and deport. The IRS would cross check those details against confidential databases to confirm the individuals’ identity and location.

The arrangement deeply alarmed career IRS officials and led to a steep drop-off in tax filing in immigrant communities, The Washington Post reported.

In August, DHS requested 1.2 million names from the IRS, which returned hits matching about 47,000 individuals, according to court records.

But on Friday, Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia held that the arrangement violated the privacy rights that underpin the U.S. tax code. She said the individuals, plus the taxpayer rights group that brought the complaint, faced severe harm if the data-sharing agreement was allowed to continue.

“If this risk were to materialize, then Plaintiffs’ members would be subject to grave harm, including, but not limited to, illegal removal from the United States,” Kollar-Kotelly wrote in granting a preliminary injunction to halt the arrangement. “Furthermore, Plaintiffs have shown that the risk of this harm has led many of Plaintiffs’ members to forgo filing for tax benefits to which they are entitled.”

She added that the lost revenue from immigrants who avoid filing taxes out of fear of deportation harmed the American public at large by depriving the government of funds.

“While Plaintiffs and their members face particular immediate harm from the IRS’s Address-Sharing Policy, the American public in general faces long-term harm from their government losing a substantial amount of revenue,” Kollar-Kotelly wrote.

It is unclear whether the IRS will ask the U.S. Court of Appeals for the D.C. Circuit to review the ruling. Representatives for the Treasury Department did not immediately respond to a request for comment.

“The judge has recognized taxpayers’ expectation that the IRS is going to keep their information confidential and strictly apply exceptions, because, as she wrote, confidentiality is core to taxpayers’ trust in the system,” said Nina Olson, executive director of the Center for Taxpayer Rights, an advocacy and low-income tax assistance organization that is the plaintiff in the case. “Taxpayers’ willingness to share deeply personal information with the IRS is at the heart of our tax system.”