By Louise Radnofsky
The Internal Revenue Service acted unlawfully when it turned over tens of thousands of taxpayers' addresses to Immigration and Customs Enforcement, a federal judge found Friday, in a ruling that also limited immigration authorities' ability to use the information.
U.S. Judge Colleen Kollar-Kotelly in Washington, D.C., found significant legal problems with the data-sharing agreement between the two agencies and blocked the policy from continuing, in the first detailed ruling on the arrangement.
"Plaintiffs have shown a substantial likelihood that both the IRS's implementation of the Address-Sharing Policy and its subsequent sharing of taxpayer information with ICE were unlawful," wrote Kollar-Kotelly, who was appointed by President Bill Clinton.
Among the reasons she laid out: "the IRS failed to acknowledge and explain its departure from its prior policy of strict confidentiality, failed to consider the reliance interests that were engendered by its prior policy of strict confidentiality, and failed to provide a reasoned explanation" for the policy change.
The deal, she said, likely violated the Administrative Procedure Act's prohibition on government agencies from acting in an "arbitrary and capricious" manner, and didn't comply with requirements in the Internal Revenue Code.
Data demands from ICE triggered months of executive departures and legal debates inside the IRS. The tax agency moved from rejecting broad requests in February to agreeing to make narrower disclosures in August. The IRS found more than 47,000 matches of name-and-address information from a list of 1.3 million provided by ICE.
Immigration authorities haven't said whether or how they are using the information, but tax records could help them more easily locate people who have stayed in the country despite deportation orders.
Kollar-Kotelly ordered Treasury Secretary Scott Bessent to notify Homeland Security Secretary Kristi Noem and other top immigration officials that they could only use the information turned over for nontax criminal investigations, and must limit the officials who could see it.
The departments of Homeland Security and Treasury didn't immediately respond to requests for comment on Friday.
For decades, the IRS has encouraged people to comply with tax laws even if they are in the country unlawfully, issuing individual taxpayer identification numbers often used on returns for people who don't have Social Security numbers. Tax officials have reassured filers for years that they didn't share information with immigration authorities.
"We are gratified the judge has recognized taxpayers' expectation of and reliance on the confidentiality of tax return information, and preliminarily enjoined the unlawful sharing of this information with ICE, " said Nina Olson, executive director of the Center for Taxpayer Rights, the lead plaintiff in the case.
Write to Louise Radnofsky at louise.radnofsky@wsj.com
(END) Dow Jones Newswires
November 21, 2025 17:23 ET (22:23 GMT)
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