Court flags IRS disclosure of taxpayer addresses to ICE as unlawful
Center for Taxpayer Rights v. IRS. No. 25-457. United States District Court For The District Of Columbia. Court Opinion.
A federal Court signaled that the IRS likely violated §6103 by providing thousands of taxpayers' addresses to ICE in response to incomplete requests, and the appellate Court may now decide whether deeper discovery into the program is warranted.
Holding
The district Court indicated that it would supplement the appellate record with a declaration admitting unlawful disclosures of taxpayers' addresses to ICE. It stated that the plaintiffs’ discovery request raises a substantial issue warranting further review by the D.C. Circuit.
Why It Matters
Confidential tax data protections tested. The case centers on §6103, the statute that strictly limits disclosure of tax return information to other agencies.
Large-scale disclosure is involved. The IRS transmitted roughly 47,000 taxpayer addresses to ICE under a process the agency now admits did not comply with statutory requirements.
Potential APA litigation risk. Plaintiffs argue the IRS adopted an unlawful address-sharing policy. If discovery proceeds, it could expose how interagency data-sharing decisions were made.
Procedural stage, not final ruling. The decision does not resolve the legality of the disclosures. It signals that the appellate Court may need a fuller record.
This is not yet a merits decision. It is a procedural development with significant implications for how tax data can be shared across agencies.
Key Facts
Plaintiffs challenged an alleged IRS policy that shared taxpayer addresses with Immigration and Customs Enforcement (ICE).
The Court previously issued a preliminary injunction stopping the practice.
The government appealed that injunction.
While the appeal was pending, the IRS filed a supplemental declaration from its Chief Risk and Control Officer.
The declaration admitted that on August 7, 2025, the IRS disclosed 47,289 taxpayer addresses to ICE.
Approximately 90.3% of the disclosures (42,695) occurred through a process called TIN matching.
That process matched names and Social Security numbers but did not verify that ICE supplied a taxpayer address, which §6103 requires.
Some ICE requests included obviously incomplete addresses, such as “Unknown Address” or missing street information.
Statutory Framework
Key provisions come from Internal Revenue Code §6103, which governs the disclosure of tax return information.
Relevant requirements include:
Agencies requesting taxpayer information must provide the taxpayer’s name and address.
The request must be tied to a specific criminal investigation or proceeding.
The IRS must verify that the request satisfies statutory requirements before disclosure.
These rules exist because tax return information is considered highly confidential.
Arguments
Plaintiffs argued:
The IRS adopted an unlawful “address-sharing policy” that allowed bulk disclosure of taxpayer addresses to ICE.
The agency violated §6103 by releasing addresses without verifying that ICE supplied the required taxpayer address.
The newly filed declaration shows the administrative record is incomplete and warrants discovery.
Government argued:
The disclosures complied with an existing memorandum of understanding (MOU) implementing §6103.
Discovery is inappropriate in an Administrative Procedure Act (APA) case because review is normally limited to the administrative record.
The Court should not expand the record beyond the agency’s certified materials.
Court’s Reasoning
The IRS declaration admits the agency disclosed taxpayer addresses without verifying that ICE supplied the taxpayer’s address, which §6103 requires.
The declaration confirms earlier findings that the IRS likely violated the statute when implementing the address-sharing process.
The new information materially affects the record on appeal and should therefore be included.
Discovery is generally barred in APA cases, but courts may allow it when there is evidence of bad faith or an incomplete administrative record.
The new declaration raises questions about whether the record fully explains the IRS policy.
Because the case is currently on appeal, the District Court lacks jurisdiction to grant discovery.
Under Federal Rule of Civil Procedure 62.1, the Court may state that the motion raises a “substantial issue.”
The judge concluded that discovery raises complex issues better evaluated by the appellate Court.
Result
The Court indicated it would supplement the appellate record with the IRS declaration and stated that the plaintiffs’ discovery request raises a substantial issue for the D.C. Circuit to consider.
The Takeaway
This decision does not resolve whether the IRS’s address-sharing program ultimately violated the law. It does something potentially more important for litigation strategy. The Court acknowledged that the IRS itself admitted statutory violations affecting tens of thousands of taxpayers. That admission now sits in the appellate record.
If the D.C. Circuit allows discovery, the case could expand beyond a narrow APA dispute into a broader examination of how the IRS shares taxpayer data with other federal agencies.
Citations
26 U.S.C. §6103 – Governs confidentiality and disclosure of tax return information.
Citizens to Preserve Overton Park v. Volpe (1971) – Establishes circumstances where courts may go beyond the administrative record in APA cases.
Theodore Roosevelt Conservation Partnership v. Salazar (D.C. Cir. 2010) – Describes exceptions allowing discovery when bad faith or incomplete records exist.
Florida Power & Light Co. v. Lorion (1985) – Limits judicial review to the administrative record in most APA cases.
Hispanic Affairs Project v. Acosta (D.C. Cir. 2018) – Allows discovery to determine the contours of an alleged agency policy.