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A federal appeals court on Tuesday declined to block the Internal Revenue Service from sharing certain taxpayer data with immigration authorities, dealing an early setback to immigrant advocacy groups challenging a controversial data-sharing agreement under the Trump administration.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit rejected a request for a preliminary injunction sought by Centro de Trabajadores Unidos and other nonprofits suing the federal government over the agreement.
The policy, signed last April by Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi Noem, allows U.S. Immigration and Customs Enforcement to submit names and addresses of immigrants in the U.S. illegally to the IRS for cross-checking against tax records.
Court: plaintiffs unlikely to prevail
Writing for the panel, Judge Harry T. Edwards said the advocacy groups failed to meet the high legal bar required for emergency relief.
“The plaintiffs are unlikely to succeed on the merits of their claim,” Edwards wrote, concluding that the information being shared under the agreement is not protected by the federal statute governing taxpayer privacy.
The ruling leaves the agreement in place while the broader lawsuit continues in lower court. The panel did not rule on the ultimate legality of the policy.
A representative for Centro de Trabajadores Unidos did not immediately respond to a request for comment.
Trump administration hails decision
Attorney General Pam Bondi praised the ruling, calling it a win for the administration’s immigration agenda.
“Deporting illegal aliens makes the American people safer,” Bondi said in a social media post following the decision.
The Trump administration has argued the agreement is a lawful tool to help enforce immigration laws and advance President Donald Trump’s pledge to tighten border security and expand deportations.
Agreement sparked internal backlash
The data-sharing deal drew intense criticism when it was disclosed last year, prompting the resignation of the acting commissioner of the Internal Revenue Service, who objected to the use of tax data for immigration enforcement.
Concerns deepened earlier this month after court filings revealed the IRS had mistakenly shared taxpayer information for thousands of individuals with the Department of Homeland Security.
According to a declaration from IRS Chief Risk and Control Officer Dottie Romo, the agency was able to verify only about 47,000 of the 1.28 million names ICE submitted for review.
For fewer than 5% of those individuals, the IRS provided additional address information — disclosures that may have violated internal privacy safeguards designed to protect taxpayer data, Romo said.
What the ruling means
Tuesday’s decision does not resolve whether the data-sharing agreement is lawful, but it allows the policy to remain in effect while litigation proceeds. Immigrant advocacy groups argue the arrangement chills tax compliance and undermines long-standing assurances that taxpayer information would not be used for immigration enforcement.
The case is expected to continue drawing scrutiny as the administration expands deportation efforts and as courts weigh how far federal agencies can go in repurposing sensitive data.
