On February 24, 2026, the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) affirmed the denial of a preliminary injunction that would have placed restrictions on information sharing pursuant to an agreement between the Internal Revenue Service (IRS) and Immigration and Customs Enforcement (ICE). The agreement at issue establishes procedures between the two agencies to share information for the enforcement of criminal immigration laws. A previous Legal Sidebar discussed the background of the information-sharing agreement, the legal questions at issue in the case (Centro de Trabajadores Unidos v. Bessent), and the parties' arguments before the appeals court. While the decision from the D.C. Circuit was pending in Centro, the U.S. District Courts for the District of Columbia and the District of Massachusetts each granted injunctions against information sharing pursuant to the agreement.
This Legal Sidebar discusses the reasoning of the D.C. Circuit's decision in Centro and legal questions that remain. It discusses the two separate cases in the U.S. District Courts and the injunctions granted in them. It focuses on the D.C. Circuit's and the district courts' decisions about the permissibility of the disclosures under the Internal Revenue Code (I.R.C.). Finally, it discusses congressional reactions to the court cases and subsequent developments related to the information-sharing agreement, including the IRS's admission that it had disclosed information based on incomplete and insufficient address information.
The D.C. Circuit affirmed the district court's denial of a preliminary injunction to restrain IRS information sharing. As a threshold matter, the court found sufficient associational standing by at least one of the organizational plaintiffs to allow the case to proceed. Turning to the preliminary injunction factors, the court held that the plaintiff organizations are unlikely to succeed on the merits. The court found that the information-sharing agreement is not a reviewable final agency action under the Administrative Procedure Act (APA) because it merely clarifies existing statutory duties and does not create binding legal duties. On the substantive arguments regarding whether disclosures contemplated by the agreement violated the law, the court held that the I.R.C. likely permits the disclosure of tax return information as contemplated by the information-sharing agreement between IRS and ICE.
The D.C. Circuit's opinion agreed with the government's argument focused on the plain language of the I.R.C.:
Here, the relevant statutory text is crystal clear. Upon receipt of a complete request from the proper party, [I.R.C.] § 6103(i)(2) authorizes IRS to disclose "return information other than taxpayer return information." . . . Addresses may only be disclosed if they are not "taxpayer return information," and § 6103(i)(2)(C) specifically confirms that they are not. It states: "[f]or purposes of this paragraph, a taxpayer's identity shall not be treated as taxpayer return information." . . . So taxpayer address information, as a form of taxpayer identity information pursuant to § 6103(b)(6), is not considered taxpayer return information under § 6103(i)(2)(C). Addresses are nontaxpayer return information and can thus be disclosed under § 6103(i)(2). [(emphases added)]
In other words, the court found that the combination of § 6103(i)(2)'s authorization of disclosure of return information "other than taxpayer return information" (emphasis added) and § 6103(i)(2)(C)'s exclusion of "a taxpayer's identity" (including a taxpayer's address) from being treated as "taxpayer return information" requires the IRS to provide a taxpayer's address upon receipt of a satisfactory request.
The court rejected the plaintiff organizations' legislative intent argument that Congress did not intend for § 6103(i)(2) to be used solely to obtain taxpayer address information from the IRS and at a mass scale. According to the court, the organizations' arguments would read into § 6103(i)(2) requirements that are not in the statute's text, and the court declined to depart from the plain text. Additionally, the court explained that permitting this disclosure does not run afoul of the statutory scheme requiring more restricted disclosures under other circumstances. Further, the court said that it need not look to legislative history when the statutory text is clear, as the court found § 6103(i)(2) to be, and even if it did, the relevant legislative history was inconclusive. Finally, citing Loper Bright Enterprises v. Raimondo, the court rejected plaintiffs' reliance on IRS's previous interpretations of § 6103(i)(2), which the court found to be of limited persuasiveness.
In its analysis, the court emphasized that § 6103(i)(2) does not authorize limitless disclosures of tax return information but instead imposes strict requirements for making requests, specifically, who can make a request, how, and for what reasons. Quoting the statutory text, the court stated,
The information may only be disclosed to government "officers and employees" who are "personally and directly engaged" in preparing for a court or administrative proceeding, in an investigation that may result in such a proceeding, or in a grand jury proceeding. . . . And the official must submit a request, in writing, that provides IRS with the taxpayer's name and address, . . .
Referencing the admission, discussed below, by the IRS of disclosures based on incomplete and insufficient address information, the court stated that it was only considering the facial challenge to the information-sharing agreement that the plaintiffs had brought, not an as-applied challenge (a claim arguing that the way the law as administered is unlawful) as to how the information has been shared, which was not before it.
While the D.C. Circuit was considering the preliminary injunction in Centro, the U.S. District Courts for the District of Columbia and the District of Massachusetts each granted separate injunctions preventing information sharing and use pursuant to the agreement.
In this case, the plaintiffs argued that implementation of the information-sharing agreement by IRS and ICE is contrary to law and asked the court to stay the policy under the APA and enjoin IRS from sharing tax return information pursuant to it. Neither ICE nor its parent agency, the Department of Homeland Security (DHS), is a defendant in the suit. The court distinguished the case from Centro, stating, "Centro analyzed the [agreement] on its face, while [Center for Taxpayer Rights] has analyzed the [agreement] as it was applied."
Among many arguments alleging the policy's contravention of the statute, the plaintiffs pointed to the requirement in § 6103(i)(2)(A) that the disclosure be to officers and employees "personally and directly engaged" in a nontax criminal investigation or proceeding and "solely" for those purposes. At a hearing on the motion for preliminary injunction, the government told the judge that one ICE employee received the approximately 47,000 responses to that agency's request for 1.28 million taxpayers' records. The plaintiffs argued that "given the scale of this request, ICE could not have identified in its request the specific personnel who are 'personally and directly engaged in' each one of this many purported investigations," adding that § 6103(i)(2) "does not permit the IRS to disclose information to a receiving agency liaison or data analyst, to be further passed along at the receiving agency's discretion." The government responded that "[a] law enforcement agency officer or employee could be 'personally and directly' engaged in an investigation that starts with a high-level view of agency data."
On November 21, 2025, the court stayed the policy under the APA and preliminarily enjoined the IRS from further sharing tax return information with ICE under § 6103(i)(2) "except in strict compliance with the requirements of that Section, including that the recipients of the information be 'officers and employees of [the receiving] agency who are personally and directly engaged in' a relevant nontax criminal investigation or proceeding and that the recipients will use the information 'solely for' that criminal investigation or proceeding" (brackets in original). In its opinion, the court explained that the words "personally," "directly," and "engaged," as they are used in § 6103(i)(2)(A), are narrow in scope and preclude passive involvement, such as relaying taxpayer information. The government has appealed the decision to the D.C. Circuit. On March 19, 2026, the plaintiffs filed a brief with the appeals court. In it, the plaintiffs distinguished the information-sharing agreement, which Centro held was not a reviewable final agency action under the APA, from the "address-sharing policy," which the plaintiffs argue has "significant legal effect" and is thus a final agency action.
The plaintiffs in Community Economic Development Center asked the U.S. District Court for the District of Massachusetts to enjoin the defendants, including IRS, ICE, the Social Security Administration, and DHS, from implementing the information-sharing agreement. The plaintiffs' arguments in this case largely mirror those in Center for Taxpayer Rights—including that disclosures under the information-sharing agreement are not to an employee "personally and directly engaged" in the criminal investigation or proceeding for which the information was requested.
On January 27, 2026, the court denied an injunction against the IRS, taking judicial notice of the injunction already in place in Center for Taxpayer Rights and finding that the plaintiffs could not demonstrate irreparable harm while the IRS is enjoined from implementing the policy. On February 5, 2026, the court preliminarily enjoined ICE and DHS "from inspecting, viewing, using, copying, distributing, relying on, or otherwise acting upon any return information" disclosed through the information-sharing agreement. As of the writing of this Legal Sidebar, the government has not appealed the injunction but still has time to do so. On February 27, 2026, the government filed a motion to dismiss the case in the district court, citing the D.C. Circuit's decision in Centro to argue that the information-sharing agreement is not a reviewable final agency action under the APA.
On February 11, 2026, the government filed notices in each of the three aforementioned cases that IRS had made disclosures based on incomplete and insufficient address information. As the accompanying declaration from IRS's Chief Risk and Control Officer explained, IRS received requests from ICE for the last known addresses for approximately 1.28 million individuals identified in a datafile. The datafile included "fields" that purported to show the individuals' names, taxpayer identification number (TIN), and address. From the datafile, IRS attempted to match the individuals with individuals in its records. Among two matching methods, the IRS attempted to match through matching TINs. As the declaration explained,
For individuals in the Datafile with a number in the ICE-supplied social security number ("SSN") field, IRS disclosed a last known address when the ICE-supplied first name, last name, and SSN fields matched with a name and associated TIN in IRS's records. A TIN is an identification number used by IRS in the administration of the tax laws. It is an umbrella term for, among other things, a SSN, and individual taxpayer identification number.
In other words, if IRS matched a name and TIN, it disclosed a last known address regardless of the contents of the address field in the datafile supplied by ICE.
Of the approximately 1.28 million individuals whose last known address was requested from ICE, IRS disclosed 47,289 last known addresses; 42,695, or 90.3%, of those were matched by TIN. After disclosure, IRS learned that in the ICE-supplied datafile, some of the purported addresses in the address field of the TIN-matched individuals were incomplete or insufficient, such as showing "Unknown Address" or missing a street name or street number. The declaration estimated that less than 5% of the 47,289 individuals for whom IRS provided ICE a last known address had potentially incomplete or insufficient ICE-provided address information.
After the notice was filed in Center for Taxpayer Rights, the plaintiffs filed a motion in the district court for an indicative ruling to indicate that, if the court had jurisdiction, it would supplement the record on appeal with the IRS's new declaration and also reopen discovery. In an order on February 26, 2026, the district court indicated it would supplement the record with the declaration if it had jurisdiction, and would only reopen discovery if the court of appeals agrees "that it would be useful to its decision." The district court explained that the IRS's admission
is a significant development in this case. Not only does it confirm the Court's finding that the IRS violated [I.R.C.] Section 6103(i)(2) by disclosing thousands of confidential taxpayer addresses to ICE without first determining that ICE's request included the "address of the taxpayer," but it reveals that the IRS provided confidential taxpayer addresses to ICE in response to requests from ICE that the IRS now admits were legally deficient.
The plaintiffs have made a motion to the appeals court to remand the case to the district court to supplement the record with the new declaration and to reopen discovery. As of the writing of this Legal Sidebar, that motion is still pending before the appeals court.
The developments in the litigation on the information-sharing agreement between IRS and ICE discussed in this Legal Sidebar have elicited responses from Congress. On February 12, 2026, eight senators signed a letter to IRS and DHS expressing concern about the revelations in the IRS declaration and asking for details about the disclosures and the agencies' responses to them. On the same day, minority members of the House Ways and Means Committee sent a letter asking the Treasury Inspector General for Tax Administration to investigate the disclosures. On March 3, 2026, a resolution was introduced to require the Department of the Treasury and DHS to provide the House with records regarding the data-sharing agreement.
On March 4, 2026, the House Ways and Means Committee held a hearing with the IRS Chief Executive Officer (CEO). Ranking Member Richard E. Neal alluded to the indicative ruling in Center for Taxpayer Rights in his opening statement. The IRS CEO was later asked multiple times about disclosure of taxpayer addresses to immigration officials and compliance with the injunctions in Center for Taxpayer Rights and Community Economic Development Center. The IRS CEO generally responded by declining to comment, citing ongoing litigation. He appeared to start to mention the D.C. Circuit's decision in Centro in reference to a question about the lawfulness of the disclosures and alluded to certain "mandatory responsibilities" to share data.
As discussed in a previous Legal Sidebar on Centro, if it wished to do so, Congress could consider amending § 6103(i)(2) to address arguments the courts are considering in the litigation.