Federal Judge Blocks IRS-ICE Data Sharing Agreement, Raising Privacy Concerns

A federal judge has blocked the Internal Revenue Service from providing residential addresses to Immigration and Customs Enforcement (ICE), dealing a significant setback to the Trump administration’s immigration enforcement efforts.

U.S. District Judge Indira Talwani, an Obama nominee, ruled that the data-sharing arrangement could violate privacy protections established in the Tax Act of 1976. Her order not only prevents future data transfers but also prohibits the use of information that had already been shared between the agencies.

“Defendants DHS, Secretary Noem, ICE, Acting Director Lyons, and their agents, are enjoined from inspecting, viewing, using, copying, distributing, relying on, or otherwise acting upon any return information that had been obtained from or disclosed by the IRS,” Talwani’s order states.

The ruling addresses multiple concerns, including the potential chilling effect on immigrant tax compliance and the risk of mistaken identities leading to wrongful arrests. Talwani specifically noted that “a significant portion of immigrant communities not only share common last names but also live in shared homes or in the same apartment complexes,” increasing the risk of misidentification.

The case was brought by four community organizations: Community Economic Development Center of Southeastern Massachusetts, National Parents Union, National Korean American Service and Education Consortium, and UndocuBlack Network, Inc. These groups have argued that the data sharing violates taxpayer confidentiality laws and could harm immigrant communities.

Court documents reveal the scope of the data-sharing program established in April 2025 through a memorandum of understanding between the IRS and ICE. The agencies implemented the agreement as part of the administration’s broader crackdown on illegal immigration.

According to court records, ICE submitted three separate data requests, including an initial query for 7.6 million individuals on June 5, followed by a June 24 request for 7.3 million records and a June 27 request for 1.2 million people. The IRS rejected the first two requests citing legal deficiencies but approved the third, ultimately transferring over 47,000 addresses to ICE in August 2025.

The Department of Homeland Security responded forcefully to the ruling. “We disagree with this activist judge’s ruling. Under President Trump’s leadership, the government is finally doing what it should have all along — sharing information across the federal government to solve problems,” a DHS spokesperson told Fox News Digital.

The spokesperson added that “information sharing across agencies is essential to identify who is in our country, including violent criminals; determine what public safety and terror threats may exist so we can neutralize them; scrub these individuals from voter rolls; and identify what public benefits these aliens are using at taxpayer expense.”

This is not the first judicial intervention in the matter. U.S. District Judge Colleen Kollar-Kotelly, a Clinton nominee, previously blocked the same information-sharing agreement on similar grounds. Kollar-Kotelly had also restricted Treasury Secretary and acting IRS Commissioner Scott Bessent from disclosing taxpayer information to DHS unless it was being transferred to someone working on a non-tax criminal investigation.

The rulings reflect a deepening legal dispute over the balance between immigration enforcement and taxpayer privacy rights. Legal experts note that the 1976 tax law established strong protections for taxpayer information, creating potential conflicts with aggressive immigration enforcement strategies that rely on such data.

Immigration advocates have celebrated the ruling as a victory for taxpayer rights and immigrant communities, while administration officials indicate they will likely appeal the decision as they continue to prioritize enforcement actions against individuals residing in the country illegally.

The case highlights ongoing tensions in the administration’s broader immigration policy agenda, which has faced numerous legal challenges since taking office.