What Happened?

The tax return you file is supposed to stay confidential, and a federal appeals court says the Internal Revenue Service (IRS) likely broke the law protecting it when it sent taxpayers' home addresses to Immigration and Customs Enforcement (ICE). In a unanimous ruling on Tuesday, Sept. 8, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit kept blocking the automated system the IRS used to release 47,289 addresses to immigration agents in 2025.

The two agencies signed an agreement in April 2025 letting ICE ask the IRS for taxpayer information in criminal immigration cases. Federal tax law allows that kind of sharing only under strict conditions, and the IRS admitted in a February court filing that thousands of its disclosures may not have met them.

Why Does It Matter To Me?

In June 2025, ICE asked for the last known addresses of about 1.28 million people. For more than 90% of the addresses it released, the IRS matched only a Taxpayer Identification Number and never checked the address ICE supplied, according to a Congressional Research Service (CRS) legal analysis updated Sept. 17. Some ICE requests listed "Unknown Address" or left out street names entirely.

That means a bad match could send the wrong person's address to immigration agents. In a brief to the D.C. Circuit, 115 Democratic members of Congress also argued the arrangement will cost the government tax revenue.

Both Sides, Now

The Trump administration argues the tax code's plain text lets the IRS share addresses for criminal investigations, and that the court's limits slow legitimate law enforcement. The D.C. Circuit partly agreed on Feb. 24, ruling in Centro de Trabajadores Unidos v. Bessent that the agreement itself likely complies with the law and is not a final agency decision courts can review.

The taxpayer rights groups and labor unions who sued say the IRS broke a privacy law Congress passed after Watergate. The Sept. 8 panel sided with them on how the system worked: it never required ICE to supply a real address, and it sent answers to a single ICE employee instead of officers working a specific investigation. In a Feb. 12 letter to the IRS and the Department of Homeland Security (DHS), eight Democratic senators on the Senate Finance Committee warned the system may have misidentified taxpayers, possibly including U.S. citizens.

What Happens Next?

In a Feb. 5 order, a federal judge in Massachusetts separately barred ICE and DHS from using any tax information already shared. The government's appeal of that order goes before the U.S. Court of Appeals for the First Circuit on Wednesday, Oct. 7, according to CRS, and the administration can still ask the full D.C. Circuit or the Supreme Court to review the Sept. 8 ruling.

Congress could settle the fight by rewriting the tax provision at its center, CRS notes. House Resolution 1097, which demands that the Treasury Department and DHS turn over their records on the agreement, was introduced March 3 and has sat in the Ways and Means Committee since.

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