D.C. Circuit upholds block on IRS-ICE taxpayer data sharing

A unanimous federal appeals court has upheld a preliminary injunction blocking the Internal Revenue Service from using a challenged procedure to provide taxpayer addresses to Immigration and Customs Enforcement, reinforcing limits Congress placed on access to confidential tax records.

The U.S. Court of Appeals for the D.C. Circuit ruled Sept. 8, 2026, that the IRS procedure likely failed to enforce requirements in Section 6103 of the Internal Revenue Code. The decision leaves the injunction in place while the underlying case continues; it is not a final ruling resolving every issue in the lawsuit.

What the court blocked

The case concerns an information-sharing arrangement between the IRS and the Department of Homeland Security, which oversees ICE. In June 2025, ICE sought last-known addresses from the IRS for as many as 1.28 million people it said were subjects of immigration-related criminal investigations.

The IRS then created a data-exchange procedure to process the requests. The procedure checked whether certain fields were filled in, but the appeals court said it did not ensure that ICE had supplied a valid taxpayer address. In some cases, the address field could contain only five or nine digits, even if the number was not an actual ZIP code and no street, city or state was provided.

When ICE supplied a taxpayer identification number, the IRS could match it to its records and provide the most recent address associated with that number, even when the address information in the ICE request was incomplete.

What Section 6103 requires

Section 6103 generally treats tax returns and return information as confidential. It permits disclosure to another federal agency only in circumstances authorized by Congress and subject to detailed conditions.

For the type of criminal investigation at issue, a request must identify the taxpayer and address, the taxable period, the legal authority for the investigation or proceeding, and the specific reason the information is relevant. The information also must be limited to officials personally and directly involved in a qualifying investigation or proceeding.

The appeals court said the IRS procedure likely failed to enforce the address requirement. It also found that ICE’s broad explanation raised an independent problem because it did not adequately specify why the requested information was relevant to a qualifying criminal investigation. The court said it did not need to resolve every aspect of that issue at the preliminary stage because the address-related defects were sufficient to support the injunction.

The court also held that the data-exchange procedure was likely final agency action reviewable under the Administrative Procedure Act, rather than merely an informal practice that could not be challenged in court.

How much information was disclosed

The court said the IRS had identified and disclosed 47,289 records to ICE before the district court halted the procedure. More than 90% of those records were produced through taxpayer-identification-number matching, meaning the IRS did not confirm whether the ICE request contained information plausibly reflecting the taxpayer’s name and address.

The 47,289 records are distinct from the broader request involving up to 1.28 million people. The appeals ruling does not establish that every individual disclosure was finally adjudicated unlawful. Instead, it concludes that the procedure used to make the disclosures likely failed to comply with statutory requirements.

Why the ruling matters

The decision is also an accountability ruling about executive power. The government argued on appeal that the injunction hindered federal law enforcement. But the court emphasized that executive-branch agencies must follow conditions enacted by Congress, even when officials say the information would support immigration enforcement or criminal investigations.

The district court’s Nov. 21, 2025, order requires the IRS to comply strictly with Section 6103 before making covered disclosures. It also requires advance notice to the district court before the IRS responds to future Department of Homeland Security requests for taxpayer information. The court may receive those notices under seal when necessary to protect an investigation.

The order applies to the challenged procedure. It does not categorically prohibit every form of IRS cooperation with ICE or DHS; any future disclosure would still have to satisfy the statute’s specific requirements.

What happens next

The injunction remains preliminary, so the litigation is not over. Further proceedings in district court could address the merits, the scope of any final relief and whether the government can design a different process that satisfies Section 6103.

Future developments to watch include any request by the government for additional appellate review, further district-court orders and changes to IRS, Treasury or DHS procedures for handling taxpayer-information requests.

Sources

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