Judge refuses to block IRS from sharing tax data to identify and deport
people illegally in U.S.
[May 13, 2025]
A federal judge on Monday refused to block the Internal
Revenue Service from sharing immigrants’ tax data with Immigration and
Customs Enforcement for the purpose of identifying and deporting people
illegally in the U.S.
In a win for the Trump administration, U.S. District Judge Dabney
Friedrich denied a preliminary injunction in a lawsuit filed by
nonprofit groups. They argued that undocumented immigrants who pay taxes
are entitled to the same privacy protections as U.S. citizens and
immigrants who are legally in the country.
Friedrich, who was appointed by President Donald Trump, had previously
refused to grant a temporary order in the case.
The decision comes less than a month after former acting IRS
commissioner Melanie Krause resigned over the deal allowing ICE to
submit names and addresses of immigrants inside the U.S. illegally to
the IRS for cross-verification against tax records.
“The plaintiffs are disappointed in the Court’s denial of our
preliminary injunction, but the case is far from over. We are
considering our options,” Alan Butler Morrison, the attorney
representing the nonprofit groups, wrote in an email. He noted that the
judge’s ruling made it clear that the Department of Homeland Security
and the IRS can’t venture beyond the strict limitations spelled out in
the case.
“So far, DHS has not made formal requests for taxpayer data and
plaintiffs will be keeping a close watch to be sure that the defendants
carry out their promises to follow the law and not use the exception for
unlawful purposes,” Morrison said.
The IRS has been in upheaval over Trump administration decisions to
share taxpayer data. A previous acting commissioner announced his
retirement earlier amid a furor over Elon Musk’s Department of
Government Efficiency gaining access to IRS taxpayer data.
The Treasury Department says the agreement with ICE will help carry out
President Donald Trump’s agenda to secure U.S. borders and is part of
his larger nationwide immigration crackdown, which has resulted in
deportations, workplace raids and the use of an 18th century wartime law
to deport Venezuelan migrants.
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The acting ICE director has said working with Treasury and other
departments is “strictly for the major criminal cases.”
Advocates, however, say the IRS-DHS information-sharing agreement
violates privacy laws and diminishes the privacy of all Americans.
In her ruling, Friedrich said the agreement doesn't violate the
Internal Revenue Code, so the IRS hasn't substantially changed the
way it handles taxpayer information. Instead, the Trump
administration has decided to use already existing “statutorily
authorized tools" to help with criminal investigations, Friedrich
wrote.
Federal law allows the IRS to release some taxpayer information to
other agencies if the information may assist in criminal enforcement
proceedings, and the requesting agency meets certain criteria, the
judge said.
Still, that doesn't mean that all the information the IRS holds can
be turned over, Friedrich said.
First, the investigating agency has to already have the name and
address of the person whose information is being sought. Then the
agency has to provide that information to the IRS, along with the
time span for which the information relates, the law that allows the
information to be released and the reason why any IRS-disclosed
information would be relevant to the investigation.
“In other words, the IRS can disclose information it obtains itself
(such as through audits), but not information it obtains exclusively
from the taxpayer (such as a tax return filed by the taxpayer),”
Friedrich wrote. She noted the law contains a significant exception
— a taxpayer's identity, including the individual's name, address or
taxpayer identifying number, isn't considered part of the protected
tax return information.
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