A federal judge has ruled that the IRS can legally share tax information of illegal aliens with the Department of Homeland Security, delivering a significant victory for the Trump administration’s immigration enforcement efforts.
Quick Takes
- D.C. District Court Judge Dabney Friedrich denied a preliminary injunction that sought to block IRS-DHS information sharing
- The April 2025 Memorandum of Understanding between the agencies allows data exchange for criminal investigations
- Former acting IRS commissioner Melanie Krause resigned over the controversial data-sharing agreement
- The court found the information sharing complies with federal law and doesn’t violate the Internal Revenue Code
- Critics argue the practice could discourage tax compliance and expand beyond legitimate law enforcement needs
Court Rejects Challenge to IRS-DHS Information Sharing
In a major legal victory for President Trump’s immigration enforcement agenda, U.S. District Judge Dabney Friedrich has rejected an attempt to block the Internal Revenue Service from sharing tax data with the Department of Homeland Security. The lawsuit, filed by the advocacy group Centro de Trabajadores Unidos against Treasury Secretary Scott Bessent, sought a preliminary injunction against an information-sharing agreement established between the two federal agencies earlier this year. Judge Friedrich, a Trump appointee, determined that the Memorandum of Understanding does not violate federal law.
The ruling centers on an April 7, 2025, agreement between the IRS and DHS that enables information exchange for criminal investigations. Under this arrangement, Immigration and Customs Enforcement (ICE) can cross-check suspected undocumented immigrants’ information against tax filings. The court determined that this practice falls within existing legal frameworks for law enforcement purposes, despite concerns raised by immigrant advocacy groups and privacy advocates who challenged the policy as government overreach.
Legal Framework and Limitations
Judge Friedrich’s opinion directly addressed the core legal question at stake in the case. “At its core, this case presents a narrow legal issue: Does the Memorandum of Understanding between the IRS and DHS violate the Internal Revenue Code? It does not,” wrote Judge Friedrich in her decision. The ruling clarifies that while tax information is generally confidential with criminal penalties for improper sharing, federal law does permit IRS data sharing for criminal enforcement purposes when specific criteria are met.
“information will only be used by officers and employees of ICE solely for the preparation for judicial or administrative proceedings, or investigation that may lead to such proceedings,” said the court document.
The court determined that the IRS can legally disclose information obtained through audits, though not exclusively from taxpayer filings. Additionally, a taxpayer’s identity, including name and address, is not considered protected tax return information under applicable statutes. Judge Friedrich also made the notable decision to unseal most of the Memorandum of Understanding and related legal briefs, citing a lack of compelling interest in keeping these documents fully sealed, except for protecting the privacy of lower-level government employees.
Internal Disputes and Implementation Concerns
The information-sharing agreement has already generated significant internal upheaval at the IRS. Former acting IRS commissioner Melanie Krause resigned over the data-sharing deal, highlighting tensions within the agency about the appropriateness of sharing taxpayer information for immigration enforcement purposes. This internal resistance reflects broader concerns about taxpayer privacy and the potential impact on tax compliance among immigrant communities.
“[Disclosing immigrant tax records to DHS for immigration enforcement] will discourage tax compliance among immigrant communities, weaken contributions to essential public programs, and increase burdens for U.S. citizens and nonimmigrant taxpayers,” Tom Bowman said.
ICE leadership has attempted to address these concerns by stating that the collaboration is intended for “major criminal cases.” However, civil liberties advocates remain skeptical, arguing that the agreement infringes on privacy laws and could set a dangerous precedent for expanded information sharing between government agencies. The plaintiffs have indicated they are considering further legal options while monitoring how the agencies implement the agreement.
Implications for Immigration Enforcement
This legal victory aligns with President Trump’s broader immigration enforcement strategy, which includes mass deportations and workplace raids. The Treasury Department has publicly supported the arrangement as a critical tool for identifying and locating individuals illegally present in the United States. For the administration, the court’s decision represents another step toward implementing comprehensive immigration enforcement policies using all available federal resources and data.
“So far, DHS has not made formal requests for taxpayer data and plaintiffs will be keeping a close watch to be sure that the defendants carry out their promises to follow the law and not use the exception for unlawful purposes,” Alan Butler Morrison said.
The case underscores the ongoing tension between immigration enforcement priorities and taxpayer privacy protections. While the court has determined that the information-sharing agreement complies with the law as written, the practical implementation and potential legal challenges to specific applications of the policy remain to be seen. For now, the Trump administration has secured an important legal foundation for enhanced cooperation between tax authorities and immigration enforcement agencies.
Sources:
- Trump Admin. Scores Another Court Win As Federal Judge Rules IRS May Share Illegal Alien Data With DHS – RedState
- Trump admin gets a win as judge allows IRS to share tax data with ICE
- Judge refuses to block IRS from sharing tax data to identify people illegally in U.S. : NPR
