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Democratic lawmakers challenge IRS-ICE data-sharing deal in court battle

A high-stakes legal clash exposes how the IRS may have broken federal law 42,000+ times. Could this case reshape data privacy for taxpayers forever?

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The image shows a page from a book with a black and white image of a table of numbers and text,...
The image shows a page from a book with a black and white image of a table of numbers and text, which appears to be a tax plan for the United States. The text is written in black ink on a white background, and the table is divided into columns and rows, with each row representing a different tax plan. The columns are labeled with the names of the tax plans, such as "taxes," "rates," and "duties," and the rows are filled with numerical values.

Democratic lawmakers challenge IRS-ICE data-sharing deal in court battle

Democratic lawmakers have filed a legal brief supporting a lawsuit against the IRS over its data-sharing agreement with Immigration and Customs Enforcement (ICE). The move comes as a D.C. appeals court reviews a ruling that blocked the IRS from handing taxpayer addresses to the agency. The lawmakers claim the arrangement breaks federal law and risks undermining tax compliance nationwide.

The case centres on a memorandum of understanding (MOU) between the IRS and ICE, which allowed the transfer of taxpayer information. A previous court ruling found that the IRS may have violated federal law around 42,695 times by sharing data improperly. Judge Kollar-Kotelly highlighted these potential breaches in her decision.

An earlier request from ICE sought nearly 1.3 million taxpayer records, raising concerns about privacy and legality. The IRS's own chief risk officer later admitted that much of the data was shared incorrectly, breaching the MOU's terms and possibly federal privacy protections. The new brief, led by Senators Catherine Cortez Masto and Alex Padilla alongside Representatives Adriano Espaillat, Linda T. Sánchez, and Jimmy Gomez, argues that the IRS also violated the Administrative Procedure Act. The lawmakers state that the data-sharing deal contradicts the intent of tax law, specifically section 6103 of the federal tax code. They warn that the agreement could weaken voluntary tax compliance, potentially costing the government revenue. The filing also asserts that the IRS overstepped by making a policy decision that should rest with Congress.

The appeals court will now weigh whether the IRS's actions were lawful. If upheld, the earlier ruling would keep the agency from sharing taxpayer addresses with ICE. The outcome could also set a precedent for how federal agencies handle sensitive financial data in future agreements.

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