A federal appeals court has ruled that the Internal Revenue Service violated federal law by sharing confidential tax information with Immigration and Customs Enforcement (ICE) during the Trump administration. The decision, issued Tuesday by the U.S. Circuit Court of Appeals for the District of Columbia, upholds a lower court’s injunction that prevents further data sharing between the two agencies.

The case was brought by a taxpayer-rights group challenging the legality of the IRS’s disclosures. According to the court, the agency improperly transferred taxpayer data based on partial addresses and failed to meet strict legal requirements limiting information sharing to criminal investigations. The ruling emphasized that the IRS’s actions breached protections built into the tax code, which generally prohibit disclosure of taxpayer information except under narrowly defined circumstances.

Judge Cornelia Pillard, writing for a unanimous three-judge panel, noted that the IRS had been warned twice about its unlawful disclosures stemming from a summer 2025 program. “The government and its personnel face steep civil and criminal consequences for willful disclosure of information,” Pillard wrote.

Under existing laws, taxpayer records—especially those involving individuals residing in the United States unlawfully—are protected from routine disclosure. Historically, federal policy encouraged undocumented individuals to comply with tax obligations by assuring them that their tax filings would remain confidential and not be shared with immigration authorities.

However, early in his administration, former President Donald Trump’s officials sought to expand immigration enforcement efforts by accessing IRS data. After initial IRS resistance to broad requests, the two agencies devised a process whereby ICE could submit lists of individuals to the IRS for review under a legal exception applicable to criminal investigations, including cases involving non-compliance with final orders of removal.

ICE provided the IRS with over one million names, which yielded more than 47,000 taxpayer records in response. Despite this volume, the appeals court found procedural deficiencies. One key issue was that requests submitted to the IRS did not always include complete address information, violating statutory requirements that the agency use a taxpayer’s name and full address when responding to inquiries. Additionally, the court found that the IRS only supplied the “last known address” of taxpayers rather than information pinpointing activity after removal orders were issued, undermining the criminal investigation standard.

The decision highlights the tension between immigration enforcement objectives and the statutory protections intended to safeguard taxpayer privacy. An IRS spokesperson declined to comment on the ruling. The government’s next steps in response to the appeals court judgment remain unclear.