Court Restricts IRS Sharing of Taxpayer Data with Immigration Authorities

On September 8, a federal appeals court confirmed that the IRS violated the law by sharing confidential taxpayer information with immigration authorities. The disclosures were part of a data-sharing program with ICE/DHS.

The case centers on taxpayer privacy protections under IRC §6103.

ICE requested information from the IRS on more than 1 million people. In response, the IRS provided tens of thousands of records. However, the court concluded that a significant portion of those disclosures did not comply with federal law.

There is an important clarification, though. The court did NOT say that the IRS can never share information with DHS.

Federal law does provide limited exceptions. For example, taxpayer information may be disclosed in certain criminal investigations. However, using the tax system to obtain information on a large scale for immigration enforcement is a very different matter.

This decision is especially important for people who file tax returns using an ITIN.

Tax returns contain a significant amount of personal information. Therefore, federal law places strict limits on when the IRS may disclose that information and who may receive it.

Ultimately, the court reminded the IRS of one fundamental principle:

Taxpayer confidentiality is not a recommendation. It’s the law.

We’ll continue to follow this story as it develops.