Federal judge blocks ICE from using IRS taxpayer data in enforcement

U.S. Immigration and Customs Enforcement can no longer use taxpayer information provided by the IRS after a federal judge ruled late Thursday that the Department of Homeland Security policy may “significantly raise the risk of misidentification of taxpayers.”

Judge Indira Talwani of the U.S. District Court for the District of Massachusetts found that the plaintiffs — four community groups that advocate for immigrants’ rights and provide tax, legal and other services — faced a “threat of irreparable harm” under the IRS-ICE data-sharing agreement. The judge also said they were likely to succeed on the merits of their Administrative Procedure Act claims regarding how agencies are required to propose and enact regulations.

Talwani blocked the “implementation and/or enforcement” of that IRS-ICE memorandum of understanding, as well as any “related agreements, policies, practices, and procedures … pending disposition of this litigation on the merits.”

The judge specifically barred DHS, department Secretary Kristi Noem, ICE, agency acting Director Todd Lyons, and DHS and ICE agents 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” through the MOU. 

Additionally, ICE defendants were ordered by Talwani to provide a copy of the ruling to the agency staffer “whose government-issued computer holds the information received from the IRS” on Aug. 7, 2025. The judge requested confirmation of that action by Feb. 10. 

Talwani’s decision, first reported by Politico, comes after a different federal judge last November blocked the IRS from sharing taxpayer addresses with ICE. Judge Colleen Kollar-Kotelly of the District Court for the District of Columbia ruled that the data-sharing agreement violated federal privacy laws and put immigrants at risk of their information being “impermissibly used” by ICE.

That ruling came after revelations that ICE on Aug. 6, 2025, requested the data of nearly 1.3 million taxpayers. The IRS fulfilled that request, resulting in more than 47,000 matches, court filings showed.

Thursday’s ruling referred back to government privacy and federal tax code violations cited in that decision, which was appealed by the Department of Justice a month ago. The injunction is still in effect while the U.S. Court of Appeals for the D.C. Circuit considers the case.  

In her 42-page ruling, Talwani noted that Section 6103 of Internal Revenue Code “strictly prohibits the disclosure” of taxpayer data to government agencies, private entities or citizens. With the assurance of that privacy, noncitizens have long been encouraged to file taxes, which generates “tens of billions of dollars for federal tax revenue,” Talwani noted.

“Therefore, given the federal government’s prior protective policy and the ‘serious reliance interests’ of taxpayers, it was incumbent upon the IRS to carry out a reasoned decisionmaking process before changing its policy to provide for and enable disclosure of previously considered confidential information,” she wrote.

The plaintiffs in the case argued that the IRS-ICE data-sharing policy has had a chilling effect on immigrants who use their services. Talwani said the IRS’s change in policy “directly undermines” the “credibility and activities” of the Community Economic Development Corp., a Massachusetts-based plaintiff that works with residents and businesses on economic development. 

“CEDC not only cannot advise its members not to file tax returns (which would be unlawful, contrary to CEDC’s purposes of providing tax filing assistance, and may undermine noncitizen members’ opportunity to secure their immigration status) but also cannot encourage the filing of tax returns that may result in ICE arresting and detaining them or their household members,” Talwani wrote, noting later in the ruling that the organization has seen actual harm in the form of decreased revenue due to the IRS’s actions.  

Talwani also highlighted the potential of “misidentifications due to administrative error” under the policy, which “present significant danger to citizens and noncitizens alike.” The judge pointed specifically to an op-ed published in the Wall Street Journal last month by DHS General Counsel Jimmy Percival, who wrote that “illegal aliens aren’t entitled to the same Fourth Amendment protections as U.S. citizens.”

“Given the high potential for misidentification,” Talwani wrote, “ICE’s arrests and detention practices (including, as affirmed by DHS counsel, the misapprehension that homes of individuals suspected to be noncitizens may be searched without a judicial warrant), and the absence of procedural safeguards, the court finds that the public interest is not served by ICE’s use of the confidential taxpayer information provided despite ICE’s failure to satisfy the statutorily required procedures for obtaining such information.”

Until the IRS-ICE data-sharing agreement “complies with the law and includes statutorily-mandated procedural protections,” Talwani concluded, “the court finds no basis” that pausing the pact “will interfere with ICE’s ability to enforce the law.”