Appeals Court Upholds Block on IRS Sharing Taxpayer Addresses With ICE

The court kept the preliminary block in place

Judges Patricia Millett, Cornelia Pillard and Robert Wilkins affirmed the district court's stay of the Data-Exchange Procedure and its preliminary injunction against disclosures that do not strictly comply with 26 U.S.C. § 6103(i)(2). Pillard wrote the opinion for the panel.

That statute generally makes tax returns and return information confidential. A narrow exception permits information to be provided for specified non-tax criminal investigations, but only after the requesting agency supplies required details, including the taxpayer's name and address, the taxable period, the statutory authority and the specific reason the information may be relevant.

The lower court also required advance notice before the government responds to future Department of Homeland Security requests. The appeals court said those notices may be filed under seal, preserving the secrecy of legitimate criminal investigations while allowing the court to prevent disclosures that cannot be undone.

ICE sought 1.28 million addresses; the IRS disclosed 47,289 records

ICE Acting Director Todd Lyons asked the IRS in June 2025 for the last-known addresses of 1.28 million people the agency suspected had remained in the United States after final removal orders, according to the court record. ICE asserted that the information could be relevant to investigations under a federal criminal immigration statute.

The IRS began processing those requests in July 2025. Its automated procedure checked whether certain fields were filled but did not reliably test whether ICE had supplied the information federal law required for each person.

By the time the district court intervened, the IRS had identified and disclosed 47,289 records. More than 90% were produced through a taxpayer-identification-number matching method that did not confirm ICE had provided a complete address, the opinion says.

A string of digits could pass the address check

The appellate court found that the procedure accepted any five- or nine-digit number in the address field. The number did not have to be a real ZIP code, and ICE did not have to supply a street, city or state before the IRS's identification-number matching process could return a last-known address.

The record showed that the IRS produced records in response to requests using entries such as “Unknown Address,” “Failed to Provide” and “NA NA,” as well as partial addresses missing a street name or number. Government counsel acknowledged at oral argument that some information was disclosed without complying with the statute.

The procedure also accepted a point-of-contact field as long as it was not empty—even if it said “Unknown” or “TBD.” ICE identified the same person as the point of contact for all 1.28 million requests, although the statute limits disclosure to personnel personally and directly engaged in the qualifying investigation.

What the ruling does—and does not—establish

The panel concluded that the plaintiffs are likely to succeed in showing the procedure was a final agency action and contrary to law. It also found that the threatened loss of taxpayer trust and access to time-sensitive tax assistance supported preliminary relief.

This is an appellate decision on a preliminary injunction, not a final trial judgment awarding damages or deciding every disputed legal claim. The government may seek rehearing or Supreme Court review, and later proceedings could change the case's ultimate outcome.

The ruling does not create an absolute ban on all IRS cooperation with law enforcement. Section 6103(i)(2) permits certain disclosures for specified non-tax criminal investigations when the requesting agency and IRS satisfy every statutory prerequisite. The order blocks the challenged process and requires strict compliance.

DHS disagrees; plaintiffs call the ruling a privacy victory

A Department of Homeland Security spokesperson told Reuters that the department disagrees with the decision and will continue using lawful tools to locate and remove people with final removal orders. The IRS did not respond to Reuters's request for comment.

Democracy Forward, which represents the Center for Taxpayer Rights, Main Street Alliance and two labor unions, called the decision an important protection for taxpayer privacy. That description is the plaintiffs' position, not an additional court finding.

The immediate confirmed result is narrower and concrete: the preliminary block remains in force, the challenged automated procedure cannot resume as written, and any qualifying future disclosure must meet the statute's exact requirements.

About the image

The featured image is an authentic 2012 photograph of the IRS headquarters in Washington, D.C., taken by Carol M. Highsmith as part of a General Services Administration assignment and preserved by the Library of Congress.

Highsmith placed her photographs in the public domain, and Wikimedia Commons lists no known restrictions on publication. The file provides institutional context only: it does not depict the 2025 disclosures, taxpayer records, ICE personnel, the litigants or the September 2026 decision, and its use does not imply endorsement.