DC Circuit signals IRS data deal with ICE likely unlawful

WASHINGTON (CN) — The Justice Department struggled to defend a data-sharing agreement between the Internal Revenue Service and U.S. Immigration and Customs Enforcement that allows the immigration agency to make mass requests for immigrants’ addresses before the D.C. Circuit on Tuesday.

The three-judge panel signaled it was likely to side with the Center for Taxpayer Rights and affirm a federal judge’s ruling that the agreement was unlawful because of evidence the IRS handed over taxpayer addresses without confirming ICE first had the addresses.

U.S. District Judge Colleen Kollar-Kotelly ruled in February that the IRS violated its own code “approximately 42,695 times” for each instance it disclosed last known taxpayer addresses to ICE even when their requests were insufficient.

The immigration agency is required to identify the name and addresses of the taxpayer it is requesting personally identifiable information on, rather than request information en masse.

The Bill Clinton appointee noted that, in her November 2025 preliminary injunction, she already found the IRS violated that requirement because of examples where the IRS handed over taxpayer addresses without confirming that ICE first had the taxpayers’ addresses.

The system was so lax, Kollar-Kotelly emphasized, that ICE could have submitted requests with an address like “Don’t Care 12345” or “00000” and still receive a taxpayer’s address.

U.S. Circuit Judges Cornelia Pillard and Patricia Millett, both Barack Obama appointees, grilled Justice Department attorney Jacob Christensen on the government’s position that, because a memorandum of understanding between the agencies did not count as final agency action, the advocacy group could not challenge it under the Administrative Procedure Act.

Pillard pointed to a supplemental declaration filed Feb. 11 by IRS Chief Risk and Control Office Dottie Romo, who described an automated procedure where the IRS would determine if ICE-supplied information matched any of the agency’s records. For example, if ICE provided a Social Security number for an individual, the IRS would provide their last known address.

Christensen argued the tax agency’s policy has always been to ignore requests without addresses, but Pillard said that directly contradicted Romo’s declaration, adding the court doesn’t “have mind readers” and can only look at the agency’s actions and words.

Christensen replied that the memorandum of understanding implemented the policy imperfectly, and thus the advocacy group could only make an “as applied” challenge rather than gut the entire policy itself.

U.S. Circuit Judge Robert Wilkins, also an Obama appointee, compared the government’s position to that of a local police department when an officer is accused of misconduct, where the department argues it cannot be held liable because the officer acted outside of his training.

Christensen agreed and said if the advocacy group wished to challenge the underlying August 2025 disclosure — where approximately 40,000 taxpayers’ information was provided without adequate requests from ICE — it could do so and the government would admit its mistake.

However, because the advocates argue the IRS has a broader policy to make disclosures even when an address is not provided, they do not have a case under the APA, according to Christensen.

Wilkins was not convinced.

“The plaintiffs are saying that the agency maybe has written down one thing in the [memo] but the agency is really doing something else, and we can see that because of what they did,” Wilkins said. “And there’s no reason to believe that they’re going to do anything differently in the future. So saying that the Justice Department said in some papers that its not going to happen again, doesn’t really answer the question of whether the agency is going to do it again.”

Christensen said the Romo declaration was proof the agency both acknowledged its own problematic conduct and would not repeat it.

Wilkins pointed out that admission meant, if there were another instance of improper address disclosures, a federal judge could hold the government in contempt, to which Christensen agreed.

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