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D.C. Circuit Court Shoots Down Bid To Block IRS Data-Sharing Policy Aimed At Boosting Deportations

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A federal appellate court shot down a challenge to a Trump administration data-sharing policy on Tuesday that aims to boost the deportation of illegal aliens in the United States.

In its unanimous decision, the three-judge panel for the D.C. Circuit Court of Appeals denied left-wing plaintiffs’ request to issue a preliminary injunction preventing the Internal Revenue Service (IRS) from sharing tax information with the Department of Homeland Security (DHS) to assist with the latter’s immigration enforcement operations. The panel was comprised of Chief Judge Sri Srinivasan and Judge Patricia Millett, both Obama appointees, and Senior Judge Harry Edwards, a Carter appointee.

As described by Edwards in his majority opinion, plaintiffs filed their lawsuit in the D.C. federal court system challenging the administration’s policy last February “shortly after news reporting that Immigration and Customs Enforcement (‘ICE’) was seeking address information from IRS to aid in locating” illegal aliens in the United States. The challengers’ request that the D.C. district court issue a temporary restraining order against the policy was rejected the following month.

This prompted plaintiffs to subsequently file a motion for the court to issue a preliminary injunction halting the policy’s enforcement. According to Edwards, they argued that the IRS’s policy “is contrary to law because 26 U.S.C. § 6103(i)(2) prohibits disclosure of addresses alone” and that the agency “had acted arbitrarily and capriciously by changing its interpretation of § 6103(i)(2) without adequate explanation or consideration of reliance interests.”

While the plaintiffs’ request for a preliminary injunction was being considered, the IRS and DHS executed a memorandum of understanding (MOU) in early April 2025 “outlining procedures that will govern requests under [federal law] for ‘addresses of persons subject to criminal investigation.'” As summarized by Edwards, “Both IRS and DHS acknowledged that, if ICE’s requests were invalid or unsatisfactory in some way, IRS would not disclose the information sought.”

While the district court found one plaintiff had standing to bring the suit, it ultimately determined that the challengers “were unlikely to succeed” on the merits of their arguments. As such, the court denied plaintiffs’ request for an injunction.

In agreeing with the district court’s decision, the D.C. Circuit panel similarly ruled that while one of the named plaintiffs “has standing to pursue this action, Appellants are unlikely to succeed on the merits of their claims.”

“The only issue that we decide is whether, on the sparse record before us, Appellants have met their heavy burden to make a clear showing that they are entitled to the preliminary injunctive relief sought. For the reasons indicated, we conclude that Appellants have not,” Edwards wrote.

The Carter appointee countered challengers’ claim that the administration’s policy runs contrary to what the law in question requires. He specifically noted how the specified provision of the statute “authorizes IRS to disclose address information, to specific government officials, for use in nontax criminal investigations, and only in response to a valid request.”

Edwards additionally refuted plaintiffs’ claim that the government’s policy is “arbitrary” and “capricious” by underscoring how the IRS-DHS MOU “is a nonbinding policy statement without legal effect,” and “is thus not a final agency action reviewable under the Administrative Procedure Act (‘APA’).” “Furthermore,” he wrote, “if we find, as we do, that the ‘best reading’ of the statute does not support Appellants’ position, then no agency action may countermand the court’s judgment.”

“Indeed, Appellants readily admit that a remand to IRS to further explain its new interpretation would be a ‘useless formality’ given the court’s duty to independently interpret the statute,” Edwards added.

Tuesday’s ruling does not address the Trump administration’s “alternate arguments against issuance of a preliminary injunction, none of which are jurisdictional,” according to the court.

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