Court taps brakes on IRS’s data-sharing pact with ICE

A federal judge has temporarily slowed the IRS’s data-sharing agreement with U.S. Immigration and Customs Enforcement while a motion to fully stop the tax agency from doing so is considered by the courts.

In orders issued Tuesday and last Friday, Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia ruled that the IRS must provide the court and plaintiffs with 24 hours notice when sharing massive amounts of taxpayer data with ICE.

The rulings came in response to an emergency motion from Democracy Forward — on behalf of a group of small businesses, two unions and a low-income tax clinic — following the revelation that the IRS last month shared a trove of taxpayer data with ICE in one day that exceeded all data that it had previously shared with federal law enforcement agencies over the course of a year. 

Democracy Forward — which is representing the Center for Taxpayer Rights, Main Street Alliance, the National Federation of Federal Employees and Communications Workers of America in the case against the IRS and several Trump administration and DOGE officials — said in a press release Tuesday that court orders “will prevent more egregious sharing of confidential taxpayer information while the court considers the request for preliminary relief.”

“This data sharing is just one consequence of the IRS’s adoption of a new, unlawful data policy that imperils hundreds of millions of Americans’ sensitive personal data,” the release continued, noting that the judge also ordered the tax agency to “produce a record of its actions” so the court can weigh whether it “acted in an arbitrary and unlawful manner.”

The IRS’s decision in the spring to share taxpayer data with ICE sparked immediate outrage from privacy and immigrant advocacy groups, and led to the then-acting commissioner’s resignation, in protest.  

The Electronic Frontier Foundation, a leading digital rights group, argued in an amicus brief filed to the U.S. Court of Appeals for the D.C. Circuit in July that the data-sharing pact violated federal tax code and did not adequately consider the real-world implications of bulk data disclosure. 

Corynne McSherry, EFF’s legal director, said in an interview with FedScoop in July that it was “inevitable” that bulk disclosures as part of the agreement would result in instances of mistaken identity. 

The courts “don’t have to look at laws in a vacuum,” she said, “and they shouldn’t, particularly in a situation where, depending on how you read this law, we could have a situation where many, many innocent people are going to be targeted for potential deportation.”

Skye Perryman, president and CEO of Democracy Forward, said in a statement that the IRS-ICE deal “ignores laws Congress passed in the wake of the Watergate scandal to protect taxpayer information.” 

“The Trump-Vance administration’s actions to share taxpayers’ most confidential data with ICE are a betrayal of the promises our government has made to Americans, and they threaten the people’s trust in the tax system,” she added. “We are grateful the court has issued this interim order to stop the threats to core privacy rights while the court considers a more formal order.”