IRS Data-Sharing With ICE Faces Legal Challenge
The fight over ICE’s mass data request may redefine how far § 6103’s criminal-investigation exception stretches in an era of algorithmic enforcement.
Court filings show that Immigration and Customs Enforcement (ICE) sought tax information from the IRS covering 1.28 million U.S. taxpayers, matching roughly 47,000 records.
The disclosures came as part of the administrative record in Ctr. for Taxpayer Rights v. Internal Revenue Serv., a District of Columbia suit filed by the Center for Taxpayer Rights, Communications Workers of America, and other groups seeking to block the agency’s cooperation with ICE.
Plaintiffs argue the data transfers breach taxpayer-privacy protections and exceed the narrow disclosure authority granted under the Tax Code.
The Law in Play
At issue is IRC § 6103, which generally prohibits IRS disclosure of return information except under enumerated exceptions, including law-enforcement use in criminal investigations.
ICE contends its bulk requests qualify under that exception because the data concern individuals under final removal orders.
The plaintiffs counter that § 6103 requires individualized, case-specific requests approved by an agency head, not broad population-level searches, and that the resulting disclosures violate the Tax Reform Act, Privacy Act, and Administrative Procedure Act.
Timeline
Feb. 18, 2025: ICE requests data on roughly 700,000 people under removal orders. IRS Criminal Investigation Chief Guy Ficco circulates the request internally.
Late February 2025: Deputy Commissioner Douglas O’Donnell advises that the IRS “cannot provide information responsive,” citing § 6103 limits.
Apr 2025: Agencies sign a memorandum of understanding (MOU) enabling secure data transfers through Kiteworks.
Jun 2025: ICE expands its scope to 7.6 million records (the “full alien population”). IRS Chief Counsel Andrew De Mello flags deficiencies and halts processing.
Jun. 27, 2025: Under Acting Director Todd Lyons, a refined request for 1.28 million records is submitted; the IRS finds 3.7% matches (≈47,000 records).
Aug. 7, 2025: Treasury official Kenneth Kies instructs that “no press release” accompany the disclosure.
Oct. 29, 2025 – IRS files redacted correspondence as part of the administrative record in ongoing litigation.
The Larger Story
The case exposes a growing clash between tax confidentiality and cross-agency data sharing.
IRC § 6103 was designed to limit political or law-enforcement misuse of tax data, yet modern interagency demands increasingly pressure those boundaries.
IRS workload data suggest that large, automated record requests—especially those unlinked to specific investigations—strain privacy compliance and administrative capacity.
The lawsuit will test how courts interpret statutory exceptions in the age of bulk analytics.
What It Means in Practice
Agencies relying on § 6103(h)(1) disclosures must document individualized criminal-investigation bases and obtain required sign-offs.
Practitioners advising clients facing information-sharing subpoenas should confirm that disclosure authority and MOU procedures conform to statute.
Organizations handling tax data under interagency agreements should maintain data-minimization protocols and written justifications for each record transfer.
Expect increased scrutiny from the Treasury Inspector General for Tax Administration (TIGTA) on disclosure tracking and audit trails.
Next Steps
The D.C. District Court is reviewing the administrative record before ruling on the plaintiffs’ motion for preliminary injunction.
No briefing schedule beyond record submission has been set.
Further filings are expected from Democracy Forward Foundation, representing the plaintiffs, and from the Department of Justice on behalf of the IRS.
Citation
Ctr. for Taxpayer Rights v. Internal Revenue Serv., D.D.C., No. 1:25-cv-00457, submission of administrative record Oct. 29, 2025.