A federal judge on Monday refused to block the Internal Revenue Service (IRS) from sharing the data of taxpayers facing criminal investigation with immigration authorities, rejecting arguments from advocacy groups that the move would violate federal privacy protections and chill tax compliance by illegal immigrants.
The judge noted that the terms of the IRS-DHS memorandum of understanding do not violate any data-sharing requirements set out in federal law, including that the DHS submit written requests for the data, identify specific individuals under criminal investigation, and provide justification for the request. Then, only after verifying compliance with Section 6103 of the tax code, may the IRS share limited identity information, such as names and addresses.
“At its core, this case presents a narrow legal issue: Does the Memorandum of Understanding between the IRS and DHS violate the Internal Revenue Code? It does not,” Friedrich wrote. “The plain language of 26 U.S.C. § 6103(i)(2) mandates disclosure under the specific circumstances and preconditions outlined in the Memorandum. For this reason, the plaintiffs have failed to show they are likely to succeed on their claims.”
The ruling marks a legal win for the Trump administration, which has pushed to integrate federal tax and immigration enforcement as part of a broader crackdown on illegal immigration.
“Release of such information would subject individual members of CTU and ISD to privacy harm and harm in the form of the arrest, detention, or other deprivations of liberty associated with the Trump Administration’s stated intention to engage in mass actions against immigrants in the United States,” the groups wrote in their complaint.
However, the court found that the IRS-DHS agreement complies with the law because, while Section 6103 of the tax code generally prohibits disclosure of confidential tax return information such as names and addresses, it includes exceptions for criminal enforcement. The judge noted in her ruling that the memorandum of understanding does not authorize disclosures for civil immigration enforcement, such as deportations not tied to a criminal charge.
Even though the plaintiffs expressed concern that DHS might use the information for broader deportation efforts unrelated to criminal proceedings, Friedrich noted that there was no evidence that the agencies involved had violated the agreement or the law, and that the advocacy groups’ fears were based on media reports speculating that the Trump administration was “seeking location information for 700,000 or alternatively seven million, illegal immigrants.”
“On this limited record, the Court cannot assume that DHS intends to use the shared information to facilitate civil rather than criminal proceedings,” the judge wrote, adding that should the DHS decide to abort the criminal investigation and instead pursue civil deportation, the agency would have to return the information to the IRS and be barred from using it in any way.
The court also rejected claims that the IRS had unlawfully reversed its past position. While the advocacy groups pointed to older IRS guidance suggesting address-only requests could not be honored, Friedrich found no binding policy had been rescinded. He concluded that even if there had been a change, it was not subject to review under the Administrative Procedure Act.
A request for comment sent to the plaintiffs’ attorney was not immediately returned.
