D.C. Circuit Rejects Request to Enjoin IRS Info Sharing Agreement With DHS

(Parker Tax Publishing March 2026)

The D.C. Circuit affirmed a district court and held that community organizations were not entitled to preliminary injunctive relief prohibiting the IRS from sharing taxpayer address information with the Department of Homeland Security for immigration enforcement purposes under an information sharing agreement. The D.C. Circuit agreed with the district court that the information sharing agreement was authorized by Code Sec. 6103(i)(2) and therefore, the organizations' arguments that the IRS's policy is contrary to law and arbitrary and capricious were unlikely to succeed on the merits. Centro de Trabajadores Unidos, et al. v. Bessent, 2026 PTC 44 (D.C. Cir. 2026).

Background

In 2025, Centro de Trabajadores Unidos, Immigrant Solidarity DuPage, Somos Un Pueblo Unido, and Inclusive Action for the City (collectively, Organizations) filed a lawsuit in a district court seeking declaratory and injunctive relief to prevent the IRS from sharing personal tax information with the Department of Homeland Security for immigration enforcement purposes. The Organizations initiated the lawsuit shortly after news reporting that Immigration and Customs Enforcement (ICE) was seeking address information from the IRS to aid in locating undocumented immigrants.

The Organizations moved for a temporary restraining order to block the IRS from sharing taxpayers' address information. They then moved for a preliminary injunction, challenging the IRS's contested policy on two grounds. First, the Organizations claimed that the IRS's policy was contrary to law because Code Sec. 6103(i)(2) prohibits disclosure of addresses alone. Second, the Organizations claimed that the IRS had acted arbitrarily and capriciously by changing its interpretation of Code Sec. 6103(i)(2) without adequate explanation or consideration of reliance interests. The Organizations pointed to Section 11.3.28.4(5) of the Internal Revenue Manual (2025), which states that requests under Code Sec. 6103(i)(2) seeking only taxpayers' addresses "do not comply" with the statute.

While the Organizations' motion for a preliminary injunction was pending, the IRS and DHS executed a Memorandum of Understanding (MOU) outlining procedures that will govern requests under Code Sec. 6103(i)(2) for addresses of persons subject to criminal investigation. Under the MOU, the IRS agreed to review each ICE request for completeness and validity pursuant to Code Sec. 6103(i)(2). If the statutory requirements are satisfied, the IRS will search for the last known address for each individual in the request and provide that address to ICE. Both the IRS and DHS acknowledged that, if ICE's requests were invalid or unsatisfactory in some way, the IRS would not disclose the information sought.

In Centro de Trabajadores Unidos, et al. v. Bessent, 2025 PTC 165 (D. D.C. 2025), the district court denied the Organizations' request for a preliminary injunction after finding that they were unlikely to succeed on the merits of either their contrary-to-law or arbitrary-and-capricious challenges to the MOU. Regarding the contrary-to-law claim, the district court explained that Code Sec. 6103(i)(2) unambiguously authorized disclosure of addresses, conditional on satisfaction of the provision's requirements and compliance with its procedures. As to the arbitrary-and-capricious claim, the district court found that the IRS policy statements on which the Organizations relied were nonbinding and lacked legal effect. The Organizations appealed to the D.C. Circuit.

Analysis

The D.C. Circuit agreed with the district court that the Organizations were unlikely to succeed on the merits of their claims. The Organizations' contrary-to-law argument was, in the court's view, foreclosed by the plain text of Code Sec. 6103(i)(2). The court found that the statute is clear: upon receipt of a valid request, the IRS is required to disclose "return information other than taxpayer return information." The statute straightforwardly states that addresses can be disclosed if they are not "taxpayer return information." Addresses are not "taxpayer return information," the court found, because Code Sec. 6103(i)(2) specifically provides that a taxpayer's identity (which includes a taxpayer's mailing address) "shall not be treated as taxpayer return information."

The court emphasized, however, that Code Sec. 6103(i)(2) does not contemplate or authorize freewheeling disclosure of sensitive information. It imposes specific requirements for requesting information from the IRS, strictly delineating who can make a request, how, and why. The court explained that under Code Sec. 6103(i)(2)(A), a valid request for return information, including addresses, must come from the head of a federal agency, an agency inspector general, or listed Department of Justice officials. 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. The proceeding in question must be related to enforcement of a nontax federal criminal statute. And under Code Sec. 6103(i)(2)(B), the official must submit a request, in writing, that provides IRS with the taxpayer's name and address, the relevant taxable periods, the nontax federal criminal statute at issue, and the "specific reason or reasons why such disclosure is, or may be, relevant." Only if every requirement is satisfied "shall" IRS disclose return information, including address information.

The Organizations' arbitrary-and-capricious claim was unlikely to succeed, the court found, because the MOU is a nonbinding policy statement without legal effect and is therefore not a final agency action that is reviewable under the Administrative Procedure Act. The court explained that, to be final, an agency action must (1) mark the consummation of the agency's decision-making process and (2) determine rights or obligations or produce legal consequences. The MOU, the court observed, was not the product of notice-and-comment rulemaking, was never characterized by the IRS as a "rule," and neither party argued that the IRS relies on the MOU to justify its actions. The court said that the MOU merely outlines the process through which ICE can request addresses from the IRS.

The court also found that there was no merit to the Organizations' claim that the IRS's endorsement of the MOU should be viewed as arbitrary and capricious because the IRS changed its position without ample explanation. In the court's view, this case turned on whether Code Sec. 6103(i)(2) required the IRS to act as it agreed to in the MOU, and no explanation could justify or make lawful the IRS's new interpretation of the statute. Under the standard set forth in Loper Bright Enterprises et al. v. Raimondo, 2024 PTC 237 (S. Ct. 2024), the IRS was required to act pursuant to the court's "best reading" of the statute. Having found that Code Sec. 6103(i)(2) requires the IRS to disclose address information in response to a valid request regardless of the MOU, the court concluded that remanding to the IRS to explain its change of position would be (as even the Organizations conceded) a "useless formality."

For a discussion of civil damages for unauthorized disclosures of returns and return information, see Parker Tax ¶262,140.

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